Dollar Falls vs. Euro, Yen on Recession Fears

As the investors feared that the U.S. financial institutions will continue to lose on the credit crunch and the oil prices rose, the U.S. dollar declined from its local maximums against euro and yen.
The  U. S. currency fell for a second day against the euro and for the first day against the Japanese yen after the Federal Reserve Bank of Minneapolis President Gary H. Stern said that the U.S. credit crisis will get even worse soon. Dollar declined even against the Great Britain pound today despite the poor dynamics of the pound against other currencies.
As the financial sector is still far from its normal state, the Fed won’t be able to raise the interest rate soon. The lack of traders’ confidence in higher rates prevents dollar from going for any significant bullish rally on Forex.
Gary  H. Stern in his interview for the Financial Times forecasted that the crisis will probably last for a year or even more. The current easement isn’t a recovery, it’s just a small pause in a far more dangerous financial environment according to Federal Reserve Bank of Minneapolis President.
USD/JPY fell from 107.87 to to 107.45 as of 15:23 GMT today; but before decline this currency pair reached it’s highest value since June 26 at 108.07. EUR/USD rose from 1.5697 to 1.5753. GBP/USD went up from 1.9910 to 1.9944.

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