Investing.com - The U.S. dollar dropped against its U.S. counterpart on Wednesday, as indications the Federal Reserve could wait longer before raising interest rates weighed on demand for the greenback.
USD/CAD hit 1.2404 during early U.S. trade, the pair's lowest since February 18; the pair subsequently consolidated at 1.2428, declining 0.47%.
The pair was likely to find support at 1.2359, the low of February 17 and resistance at 1.2566, the high of February 20.
In prepared remarks during testimony to the Senate Banking Committee, Fed Chair Yellen said it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.
She added that if the economy keeps improving as the Fed expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.
The remarks prompted investors to push back expectations for a mid-year U.S. interest rate hike.
The loonie was higher against the euro, with EUR/CAD sliding 0.46% to 1.4096.
The single currency remained under pressure as lingering doubts over the agreement to extend Greece’s bailout by four months kept investors cautious.
Both the International Monetary Fund and the European Central Bank warned Tuesday that Greece’s reform plans are not detailed enough and said Athens will need to do more to secure the release of further bailout funds.
Later in the day, the U.S. was to release data on new home sales.