Tuesday, 26 Oct 2010

Dollar Up as EUR/USD Fails near 1.4000

The dollar rose after the euro again lost momentum near $1.40 on Tuesday, while the yen fell from a 15-year peak after a Japanese minister called gains one-sided and warned authorities could act to stem further yen strength. The euro and yen each shed 1 percent against the dollar, which rose to 81.65 yen, slightly more than a yen above a 15-year low hit on Monday.

Although both the euro and yen were within recent well-worn ranges, some traders said the U.S. currency was benefiting from a creeping sense that the Federal Reserve may proceed more cautiously than previously thought if it launches a new round of monetary easing when it meets next week as expected.

Few doubt the Fed's intention to announce plans to buy more U.S. government bonds, a process that would push down U.S. interest rates and undermine the dollar's appeal to investors.