The dollar dropped for a sixth day against the euro, matching the longest losing streak since May 2009, on speculation the Federal Reserve will consider measures to keep yields low to support the U.S. economy.
The greenback fell to almost the lowest level since August 2008 against the currencies of major U.S. trading partners as a report showed home prices dropped by the most in more than a year. The central bank begins a two-day policy meeting that will be followed by Fed Chairman Ben S. Bernanke’s first post policy decision press conference.
The U.S. central bank will leave its target rate for overnight lending between banks at zero to 0.25 percent at its two-day meeting. The Fed may say it plans to complete the purchase of $600 billion of Treasuries by June.
The S&P/Case-Shiller index of home prices in 20 U.S. cities fell 3.3 percent in February from a year earlier in the biggest decrease since November 2009.
“The bias is still very much to sell the dollar, and any pullbacks in euro and the commodity currencies are still very shallow,” said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. “The market is expecting the Fed statement to reaffirm the weak-dollar trend.”
The euro rose earlier against the yen and dollar as European Central Bank President Jean-Claude Trichet indicated policy makers stand ready to raise interest rates to counter inflation expectations.
“We have risks of second-round effects here and there,” Trichet said in the transcript of an interview with the Finnish publications Helsingin Sanomat and Kauppalehti that was released on the ECB’s website. Second-round effects refer to an increase in consumer prices prompting bigger wage increases that then feed through to faster inflation.