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Forex - EUR/USD dips but losses limited after Fed rates pledge

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Forexpros - The euro edged lower against the U.S. dollar on Wednesday, pulling back from a two-day high, but losses were limited after the Federal Reserve pledged to keep rates at ultra-low levels "at least" through mid-2013.

EUR/USD retreated from 1.4397, the highest since August 8, to hit 1.4322 during late Asian trade, shedding 0.36% on the day.

The pair was likely to find support at 1.4054, the low of August 5 and a two-week low and short-term resistance at 1.4425, the high of August 8.

The Federal Reserve pledged on Tuesday to keep its benchmark interest rate at an all-time low, adding that it will maintain a loose monetary policy until "at least through mid-2013."

In a statement, the Fed said growth was much slower than expected and the labor market had deteriorated, underlining concerns over the U.S. economic outlook.

"The FOMC now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually" from the July level of 9.1%, the statement said.

The Fed also indicated that it "discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability" and said it was prepared to employ the tools "as appropriate".

Minutes of the Fed's meeting will be published on August 30 and will provide more insight into the policy debate.

The euro was also fractionally lower against the pound, with EUR/GBP easing down 0.01% to hit 0.8808.

Later in the day, Germany was to release government data on consumer price inflation, while the U.S. was to produce data on the federal budget balance as well as reports on crude oil stockpiles and wholesale inventories.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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