Investing.com - The dollar fell against most major currencies on Tuesday after the Federal Open Market Committee kicked off a two-day meeting amid market expectations for a possible decision to taper monthly asset purchases albeit in very slight and gradual manner.
In U.S. trading on Tuesday, EUR/USD was up 0.16% at 1.3356.
Earlier Tuesday, the Fed opened its widely-awaited monetary policy meeting, with many avoiding the dollar on uncertainty as to whether the U.S. central bank will announce plans to begin tapering its USD85 billion monthly bond-buying program, which weakens the dollar by driving down interest rates to spur recovery.
The dollar remained soft on the notion that the Fed will only slightly trim the amount of bonds it buys each month if it decides to adjust the policy at all.
Few, if any, expect the Federal Reserve to hike interest rates any time soon.
Elsewhere, soft increases in the cost of living in the U.S. kept the greenback lower as well.
The U.S. consumer price index rose by 0.1% in August, missing expectations for a 0.1% gain.
The core consumer price index, which is stripped of volatile food and energy prices, rose 0.1% in August, in line with forecasts.
Across the Atlantic in Europe, the closely watched ZEW index of German economic sentiment rose to its highest level since April 2010 in September, which bolstered the single currency.
The German ZEW index rose to 49.6 in September from 42.0 in August. Analysts were forecasting a reading of 46.0.
The ZEW index of euro zone economic sentiment jumped to 58.6 in September, the highest reading since September 2009 and up from 44.0 in August and well above analysts' calls for a 47.2 reading.
Elsewhere, the greenback was down against the pound, with GBP/USD up 0.04% at 1.5904.
The Office for National Statistics reported that U.K. consumer price inflation ticked down to 2.7% on a year-over-year basis in August from 2.8% in July, in line with economists’ forecasts.
Core CPI remained unchanged at 2% last month, compared to expectations for an uptick to 2.1%.
Consumer prices rose by 0.4% on the month in August, compared to expectations for a 0.5% increase.
The dollar was up against the yen, with USD/JPY up 0.10% at 99.17, and down against the Swiss franc, with USD/CHF trading down 0.14% at 0.9261.
The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.25% at 1.0298, AUD/USD up 0.39% at 0.9354 and NZD/USD trading up 0.83% at 0.8239.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% at 81.32.
On Wednesday, all eyes will focus on the Federal Reserve. Chairman Ben Bernanke is to hold a press conference after the rate announcement.
Elsewhere, the U.S. is to release official data on building permits and housing starts.
In U.S. trading on Tuesday, EUR/USD was up 0.16% at 1.3356.
Earlier Tuesday, the Fed opened its widely-awaited monetary policy meeting, with many avoiding the dollar on uncertainty as to whether the U.S. central bank will announce plans to begin tapering its USD85 billion monthly bond-buying program, which weakens the dollar by driving down interest rates to spur recovery.
The dollar remained soft on the notion that the Fed will only slightly trim the amount of bonds it buys each month if it decides to adjust the policy at all.
Few, if any, expect the Federal Reserve to hike interest rates any time soon.
Elsewhere, soft increases in the cost of living in the U.S. kept the greenback lower as well.
The U.S. consumer price index rose by 0.1% in August, missing expectations for a 0.1% gain.
The core consumer price index, which is stripped of volatile food and energy prices, rose 0.1% in August, in line with forecasts.
Across the Atlantic in Europe, the closely watched ZEW index of German economic sentiment rose to its highest level since April 2010 in September, which bolstered the single currency.
The German ZEW index rose to 49.6 in September from 42.0 in August. Analysts were forecasting a reading of 46.0.
The ZEW index of euro zone economic sentiment jumped to 58.6 in September, the highest reading since September 2009 and up from 44.0 in August and well above analysts' calls for a 47.2 reading.
Elsewhere, the greenback was down against the pound, with GBP/USD up 0.04% at 1.5904.
The Office for National Statistics reported that U.K. consumer price inflation ticked down to 2.7% on a year-over-year basis in August from 2.8% in July, in line with economists’ forecasts.
Core CPI remained unchanged at 2% last month, compared to expectations for an uptick to 2.1%.
Consumer prices rose by 0.4% on the month in August, compared to expectations for a 0.5% increase.
The dollar was up against the yen, with USD/JPY up 0.10% at 99.17, and down against the Swiss franc, with USD/CHF trading down 0.14% at 0.9261.
The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.25% at 1.0298, AUD/USD up 0.39% at 0.9354 and NZD/USD trading up 0.83% at 0.8239.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% at 81.32.
On Wednesday, all eyes will focus on the Federal Reserve. Chairman Ben Bernanke is to hold a press conference after the rate announcement.
Elsewhere, the U.S. is to release official data on building permits and housing starts.