Dollar Softness Continues Ahead of Fed

The U.S. Dollar held above but remained close to a recently struck 2-month trough against the Japanese Yen however analysts believe that any potential gains are likely to be limited until after the Federal Reserve addresses the issue of quantitative easing at its next monetary policy meeting. A rout in global equities had begun nearly two weeks ago as market players debated whether or not the U.S. central bank would actually move to curtail its existing stimulus program rather than simply hint about future possible actions; recent speculation suggests that the Fed will rein in the program soon.

As reported at 11:02 a.m. (JST) in Tokyo, the USD/JPY pair was trading at 94.61 Yen, close to 93.75 Yen which was last Thursday’s 2-month; analysts expect that dollar weakness is likely to continue for some time at least. The EUR/USD pair was also holding near to a recently struck 4-month high and was trading at $1.3362; the Euro has been supported by the European Central Bank’s announcement late last week that the likelihood of a deposit rate reduction below zero, as had been suggested in a previous policy meeting, was no longer a viable option.