The euro slipped back this evening from its latest four year highs of this morning against the dollar. It ended its European session at around USD 1.1344 as investors took profits after its recent meteoric gains. Dealers said there was also caution in the market ahead of tonight's decision by the US Fed on interest rates there. While most economists expected the Fed to keep rates on hold tonight at the current 1.25 pc, there was some uncertainty over the slant they will put on their bias statement, assuming there is one this time around.
Analysts at UBS Warburg argued that if the assessment is balanced, this would be a catalyst for euro/dollar profit taking, particularly as the market turns its attention to the European Central Bank announcement on Thursday. The ECB is also expected to keep rates on hold, with economist forecasting a cut at the June meeting instead.
Despite this afternoon's bout of profit taking, euro/dollar easily remained above the 1.1300 level in deals, having hit fresh four-year highs this morning////www.fxcentre.com