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Previous session overview The dollar fell to almost a nine-month low against the euro in Asia Wednesday as investors reduced dollar holdings on views that the U.S. currency may weaken for now due to pessimism over the U.S. economy. Investors have been selling the greenback across the board as they speculate the Federal Reserve will be forced to keep its interest rates low for the time being to support the country’s fragile economy. Indeed, The Dollar Index, a gauge of the currency’s value against six major currencies including the euro, fell to a one-year low of 76.407. On Tuesday, Chairman Bernanke said that, from a technical point of view, the “recession is very likely over at this point,” during a question-and-answer session at the Brookings Institution. The euro advanced to a new nine-month high against the dollar Tuesday for the sixth consecutive trading session. It remained firm Wednesday, while the dollar and sterling both fell back. At 0615 GMT, the euro was trading at USD1.4687, up from USD1.4658 in late New York business Tuesday. The British pound fell to a one-week low against the greenback after Bank of England Governor Mervyn King made statements that he would consider rate cuts on commercial banks’ reserves held at the central bank. The news raised speculation that the BoE may continue to extend its 175 billion pound quantitative easing program. The Australian dollar continued to press higher in Asia on Wednesday and should push for a fresh one-year high as key support for a weakening U.S. dollar gives way. Market expectation The euro is supported against the U.S. dollar and the U.K. pound as risk appetite got a further boost. USDJPY traders comments on the react drop to JPY90.50 in dollar-yen after new FinMin intervention comments, says a local came in and bid the level causing short term specs to cover back. Rate currently trades around JPY90.62. Cable meeting resistance at USD1.6480/85 (USD1.6483 61.8% USD1.6515/1.6431) and further resistance noted at USD1.6495 (76.4%) ahead of stronger area between USD1.6515/20. Bids now seen placed to USD1.6430 (76.4% USD1.6403/1.6515), stronger toward USD1.6400 with stops below. Looking ahead, currency players will watch for the U.S.’s consumer price index for August because a bad figure could lead to lower long-term U.S. interest rates, and that would prompt more dollar selling, said analysts. About Australian dollar analysts said the local unit is now in a well entrenched upward path and should break its recent high of USD0.8676, helped by firmer equities and the U.S. dollar’s woes. European stock markets are expected to open modestly higher Wednesday, benefiting from healthy U.S. and Asian markets overnight, after Federal Reserve Chairman Ben Bernanke further boosted investor confidence by calling an end to the recession. Source: Dukascopy