Forex News Review – Dollar weakens ahead of Fed meeting

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The euro rallied higher in the U.S. session, supported by a series of satisfactory euro zone bond auctions today, which lifted market sentiment. Meanwhile a weaker dollar helped lift euro after a report on U.S. home prices and consumer confidence came in weaker. This fuelled speculation that the Fed will keep interest rates low.  Investors are turning their focus on the Fed meeting on Wednesday and Thursday. Low rates will cause investors to shift funds out of the low-yielding U.S. dollar and into foreign assets that offer higher yields,and sell-off the dollar.

EURUSD rose in New York trading hours to 1.3217 from 1.3147.

EURJPY rose in line with other euro pairs, climbing to 107.29 from 106.53.

The broadly weaker dollar fell against the Swiss franc, pushing USDCHF down 0.5 percent to 0.9089.

Sterling maintained strength against the dollar, with GBPUSD trading near a six-month high of 1.6162. The pound is buoyed by speculation that the Bank of England will not expand QE at its next meeting.

The greenback also fell against the Canadian dollar, with USDCAD dropping to 0.9875.

However, dollar was stronger against yen, which is under pressure due to speculation that the Bank of Japan will ease policy at its meeting on Friday. USDJPY rose to 81.33, higher than Monday’s close.