The euro edged higher, with measures of the U.S. dollar mixed, in East Asia trading hours Wednesday, though some analysts pointed to further downside for the European currency.
The euro EURUSD -0.12% rose to $1.2284 up from $1.2278 late Tuesday in North America, extending its gain after U.S. Federal Reserve Chairman Ben Bernanke hinted at more easing if needed. Read more on Tuesday’s forex moves.
The ICE dollar index DXY +0.05% , which tracks the U.S. unit against six other currencies, ticked lower to 83.059, down from 83.075 late Tuesday.
Bernanke testifies to Congress
Federal Reserve Chairman Ben Bernanke delivers his first of a two-day semiannual report to Congress. Photo: Reuters.
The WSJ dollar index XX:BUXX +0.06% — a new benchmark with a slightly larger currency basket and based on overall foreign-exchange market turnover — stood at 72.10 roughly near its late Tuesday level. The index is based on a value of 100 for its June 6, 2001 baseline date. Read more on new WSJ dollar index.
Although Bernanke opened the door to possible further policy easing and made downbeat comments on the U.S. economy, analysts said the dollar may soon move back up against the euro.
Crédit Agricole analysts described the dollar’s initial gain, when Bernanke’s testimony to Congress began as “a risk-off reaction,” which “quickly faded as markets realized that the testimony did not deliver any ground-breaking news.”
“We expect that the [U.S. dollar] will continue to find support, particularly once market attention shifts back to political developments in Europe. In the meantime, [U.S.] housing data due out today will likely lend more support for the [dollar] by highlighting that the dormant housing sector is starting to show signs of life,” Crédit Agricole said in a note Wednesday.
BK Asset Management managing director Kathy Lien agreed.
“The threat of continued fiscal problems [in Europe], recessionary conditions across the region and weakening demand for German exports made investors more pessimistic about current and future economic conditions. As a result, there could be serious obstacles to a [euro] recovery,“ she said.
Among other major currency pairs, the British pound GBPUSD -0.10% inched up to $1.5651 from $1.5642 late Tuesday, while the Australian dollar AUDUSD -0.11% slipped fractionally to $1.0308 from $1.0311.
Against the Japanese yen, the dollar USDJPY -0.10% sat little changed at ¥79.05, compared to ¥79.06 Tuesday, after having touched a one-month high earlier in the week.
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