Euro Hits Fresh Multi-Month Lows

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The euro remained under pressure versus other major currencies, weighed down by debt concerns and the growing perception the euro area is being marginalized as the China and the US assume a more pivotal role on the world stage.

With stocks still in the doldrums and this week's mixed economic data failing to inspire much confidence in the global recovery, risk averse traders have flocked to the dollar, and to a greater degree, the yen.

Trading took place ahead of the Federal Reserve's decision on interest rates, scheduled to be made public at around 2:15 pm ET.

The Fed is unlikely to suggest an end to its near-zero interest rate policy, as the economy still grapples with unemployment and shaky consumer confidence, while facing a benign inflation environment. Traders will be looking to the Fed's accompanying statement for clues about the health of the US economy.

The euro touched a fresh 5-month low of 1.4020 versus the greenback overnight, and remained near that mark two hours before the Fed rate call.

US new home sales unexpectedly dropped to a nine-month low December, official data revealed Wednesday.

Although the Commerce Department report also showed a significant monthly increase in new home prices, the second consecutive drop in overall sales added to mounting evidence that the government-aided recovery of the housing sector has petered out.

New home sales fell 7.6 percent to an annual rate of 342,000 in December from an upwardly revised November rate of 370,000.

Against the the surging yen, the euro hit a new 8-month low of 125.22, extending January's slow and steady decline.

The Bank of Japan (BOJ) in its monthly report on Wednesday maintained its stance that the nation's economy is picking up, but does not yet have sufficient momentum to support a self-sustaining recovery in domestic demand.

The euro slipped to .8660 versus the sterling, heading closer to last week's 6-month low of .8649.

The Bank of England may find it difficult to keep inflation within the target as services and import price inflation continue to rise, the central bank's monetary policy member Andrew Sentance said Wednesday.

(Market News Provided by RTTNews)