Euro inches higher, but analysts wary
The euro edged higher, with measures of the U.S. dollar mixed, in East Asia trading hours Wednesday, although some analysts pointed to furthermore downside for the European currency.
The WSJ dollar index /quotes/zigman/9625991 XX
The WSJ dollar index /quotes/zigman/9625991 XX:BUXX +0.04% - a new benchmark with a slightly larger currency basket and based on overall foreign-exchange market turnover - stood at 72.10 roughly nearly its late Tuesday level. The index is based on a value of 100 for its June 6, 2001 baseline date. Read more on new WSJ dollar index.
Crédit Agricole analysts described the dollar's initial gain, when Bernanke's testimony to Congress began as "a risk-off reaction," which "quickly faded as markets realized that the testimony did not deliver any ground-breaking news."
"We expect that the [U.S. dollar] will continue to find support, particularly once market attention shifts back to political developments in Europe. Meanwhile, [U.S.] housing data due out today will likely lend more support for the [dollar] by highlighting that the dormant housing sector is starting to show signs of life," Crédit Agricole said in a note Wednesday.
The threat of continued fiscal problems [in Europe]
"The threat of continued fiscal problems [in Europe], recessionary conditions across the region and weakening demand for German exports made investors more pessimistic about current and future economic conditions. As a result, there could be serious obstacles to a [euro] recovery," she said.
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