Euro slips ahead of Fed decision

The euro eased against the dollar on Wednesday but held on to much of Tuesday’s gains, with investors’ focus being on whether the Federal Reserve will launch further monetary stimulus in order to support the country’s flagging economic recovery.

The single currency also gained support from indications that Greek parties could be set to create a coalition government, and the fact that Spanish government bonds gained some respite on Tuesday following a recent sell-off.

However, for the time being, the Fed’s policy decision scheduled for later today is taking centre stage. Hong Kong-based Credit Agricole’s head of global foreign exchange strategy Mitul Kotecha said that he feels the overwhelming factor is that there is expectation of Fed stimulus. He went on to say that looking at the moves overnight, it’s not only the euro that has gone up, pointing out that a number of currencies have taken advantage of the dollar’s weakness.

The euro fell by 0.1 per cent to $1.2675, giving a bit of ground back after going up by around 0.9 per cent on Tuesday. Resistance for the single currency is at $1.2748, Monday’s one-month high that was hit after voters in Greece supported a pro-bailout party in the elections at the weekend.