Dollar Falls as Fed Keeps Rates Low, Home Sales Slump

The U.S. dollar weakened today against the euro and the Japanese yen after the new home sales unexpectedly plunged ant the Federal Reserve kept the interest rates at the record low level.
The housing market in the U.S. was showing signs of the weakness recently and today’s report about the new home sales wasn’t optimistic either. In fact, it showed really depressing slump from 446,000 in April to as low as 300,000 in May. That’s even more disappointing if one considers that the experts expected only slight decline to 424,000.
The Fed said that the economic recovery is underway, noting though that unemployment remains high and the conditions on the housing market haven’t gave reason for optimism. It also suggested that the interest rates might be kept low for an extended period:

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

EUR/USD traded near 1.2313 as of 21:55 GMT today after opening at 1.2270. USD/JPY sank to 89.93 from its opening rate of 90.57.

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