The U.S. dollar drifted higher against its major counterparts in the European session on Wednesday, as investors awaited the Federal Reserve’s monetary policy announcement due out later in the day.
The Fed is widely expected to keep monetary policy unchanged and assert its ultra-loose stance to support the economy.
The Fed funds rate stands at 0-0.25 percent and the quantitative easing program at US$120 billion per month.
Fed chair Jerome Powell will hold a press conference at 2:30 pm ET.
Markets will be keeping a close eye on Powell’s comments regarding the economic outlook and any hint of tapering the Fed’s asset purchase program.
Data from the Commerce Department showed new orders for U.S. manufactured durable goods rose much less than expected in the month of December.
The Commerce Department said durable goods orders edged up by 0.2 percent in December after surging by an upwardly revised 1.2 percent in November.
Economists had expected durable goods orders to increase by 0.9 percent compared to the 1.0 percent jump that had been reported for the previous month.
The greenback spiked up to an 8-day high of 104.03 against the yen and a 1-week high of 1.2098 against the euro, up from its prior lows of 103.58 and 1.2170, respectively. The greenback is likely to locate resistance around 108.00 against the yen and 1.18 against the euro.
The greenback rose to 1.3681 against the pound and 0.8896 against the franc, after dropping to near a 3-year low of 1.3759 and a 2-day low of 0.8858, respectively in early deals. If the greenback rallies again, 1.34 and 0.90 are seen as its next resistance levels against the pound and the franc, respectively.
The U.S. currency edged up to 1.2780 against the loonie, 0.7173 versus the kiwi and 0.7680 versus the aussie, following its early lows of 1.2685 and 0.7245 and a 5-day low of 0.7764, respectively. Next immediate resistance for the greenback is seen around 1.32 against the loonie, 0.70 versus the kiwi and 0.75 against the aussie.
At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the federal funds rate to be kept at 0 – 0.25 percent.
The material has been provided by InstaForex Company – www.instaforex.com