US Dollar Drops on Federal Reserve Reluctance to Taper

US dollar struggles as it become clear that the Federal Reserve is reluctant to taper. Plus, demand for riskier assets is reducing the interest in the greenback today.

US dollar is struggling today, thanks to a combination of risk appetite and the reluctance of the Federal Reserve to begin its taper of the asset purchase program stimulating the US economy.
Right now, risk appetite has returned to the markets. US stocks are surging, with the Dow topping 16,000. On top of that, the news that China is read to effect serious economic reform is helping risk appetite as well. With so many Forex traders interested in riskier assets, it’s no wonder the greenback is struggling.
Another factor to consider is that the Federal Reserve continues to show reluctance to end the taper. Concerns about the pace of economic recovery in the United States persist, and until FOMC members feel confident about what’s next, the stimulus efforts are unlikely to end. That means dollar weakness, since stimulus usually weakens currencies.
At 16:21 GMT the US dollar index is down to 80.6700 from the open at 80.8220. EUR/USD is up to 1.3520 from the open at 1.3491. GBP/USD is higher, rising to 1.6101 from the open at 1.6123. USD/JPY is down to 100.0235 from the open at 100.2750.

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