In Asian trading, the Euro slipped against the U.S. Dollar but managed to hold onto the majority of gains made on Tuesday. Investors’ focus is squarely on Washington, D.C. and the U.S. Federal Reserve where the FOMC will be making an interest rate decision later today. Most analysts expect that the Fed will offer some form of accommodation, most likely an extension of the Operation Twist program which will be ending on June 30th. Analysts say that it is those expectations which are keeping the U.S. Dollar soft, not just against the Euro but broadly.
As reported at 1:17 p.m. (JST) in Tokyo, the EUR/USD was trading at $1.2675, a loss of 0.1%; on Tuesday, the Euro rose nearly 0.9% against the greenback. Resistance is pegged at $1.2748, the 1-month peak that was struck on Monday. The U.S. Dollar Index, viewed by investors as a gauge of the U.S. Dollar’s strength relative to other major currencies, steadied at 81.438 .DXY, very near to the 1-month trough of 81.186 .DXY struck yesterday. The U.S. Dollar could see some further appreciation if the Fed chooses only to ease via an extension of Operation Twist, but an outright QE3 would serve to weaken the currency rather.