Investing.com - The euro weakened against the dollar on Wednesday after the Federal Reserve released the minutes of its March monetary policy meeting that revealed monetary authorities remain divided over when to wind down stimulus measures.
Comments out of Tokyo that the Bank of Japan may not loosen policy further for now also bolstered the greenback against the single currency, the beneficiary of recent BoJ stimulus moves.
In U.S. trading on Wednesday, EUR/USD was down 0.10% at 1.3070, up from a session low of 1.3054 and off from a high of 1.3122.
The pair was likely to find support at 1.2969, Monday's low, and resistance at 1.3134, the high from March 8.
The Fed is currently purchasing USD85 billion in mortgage debt and Treasury holdings held by banks a month, a monetary stimulus tool known as quantitative easing that pushes down interest rates and pumps the economy full of liquidity to encourage investing and hiring, which weakens the dollar as a side effect.
Two camps appear to be emerging in the Federal Reserve as to when such programs should unwind once economic recovery gains momentum, and the uncertainty gave the dollar room to rise against the yen.
"A few members felt that the risks and costs of purchases, along with the improved outlook since last fall, would likely make a reduction in the pace of purchases appropriate around midyear, with purchases ending later this year," the Fed said in the minutes of its March monetary policy meeting.
"Several others thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end."
Meanwhile, inflationary side effects stemming from monetary stimulus tools appears manageable for now, Fed board members concluded.
Meanwhile in Japan, BoJ Governor Haruhiko Kuroda said the country has taken all measures “necessary” and “possible” to achieve its goal of hitting a 2% inflation target in two years and indicated that further easing may not ensue in the coming months.
The news sent the yen firming.
The BoJ has launched massive monetary easing programs last week designed to pump up inflation rates and fuel growth while avoiding deflationary pressures in the world’s third-largest economy.
The euro became an attractive investment among investors during the yen's decline, especially among investors seeking higher-yielding currency positions.
The euro, meanwhile, was down against the pound and up against the yen, with EUR/GBP trading down 0.11% at 0.8528, and EUR/JPY trading up 0.46% at 130.12.
Comments out of Tokyo that the Bank of Japan may not loosen policy further for now also bolstered the greenback against the single currency, the beneficiary of recent BoJ stimulus moves.
In U.S. trading on Wednesday, EUR/USD was down 0.10% at 1.3070, up from a session low of 1.3054 and off from a high of 1.3122.
The pair was likely to find support at 1.2969, Monday's low, and resistance at 1.3134, the high from March 8.
The Fed is currently purchasing USD85 billion in mortgage debt and Treasury holdings held by banks a month, a monetary stimulus tool known as quantitative easing that pushes down interest rates and pumps the economy full of liquidity to encourage investing and hiring, which weakens the dollar as a side effect.
Two camps appear to be emerging in the Federal Reserve as to when such programs should unwind once economic recovery gains momentum, and the uncertainty gave the dollar room to rise against the yen.
"A few members felt that the risks and costs of purchases, along with the improved outlook since last fall, would likely make a reduction in the pace of purchases appropriate around midyear, with purchases ending later this year," the Fed said in the minutes of its March monetary policy meeting.
"Several others thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end."
Meanwhile, inflationary side effects stemming from monetary stimulus tools appears manageable for now, Fed board members concluded.
Meanwhile in Japan, BoJ Governor Haruhiko Kuroda said the country has taken all measures “necessary” and “possible” to achieve its goal of hitting a 2% inflation target in two years and indicated that further easing may not ensue in the coming months.
The news sent the yen firming.
The BoJ has launched massive monetary easing programs last week designed to pump up inflation rates and fuel growth while avoiding deflationary pressures in the world’s third-largest economy.
The euro became an attractive investment among investors during the yen's decline, especially among investors seeking higher-yielding currency positions.
The euro, meanwhile, was down against the pound and up against the yen, with EUR/GBP trading down 0.11% at 0.8528, and EUR/JPY trading up 0.46% at 130.12.