US Dollar Falls as Traders Expect Fed Would Maintain Stimulus

The US dollar weakened on today’s trading session as analysts say that this week’s reports will show weakness of the US housing market. The unfavorable fundamentals will likely prompt the Federal Reserve to keep interest rates near zero, undermining the dollar.

Today’s report from the National Association of Realtors is expected to show that existing home sales fell from 5.05 million to 4.82 million in May. New homes sales slipped from 323,000 to 311,000 last month, according to the estimates of analysts. The Federal Reserve will make a decision on the monetary policy on June 22 and market participants expect that the Fed will keep the borrowing costs unchanged.
Morgan Stanley stays optimistic for the future of the greenback this year as the increases in the Asian countries will slow the global economic growth and will increase demand for safer currencies. Ian Stannard, the head of European foreign-exchange strategy at Morgan Stanley, explained:

We’re looking for the dollar to regain some stability over the second half of the year. We’ll see the global investment environment turn less favorable as liquidity conditions start to change at a macro level.

EUR/USD rose from 1.4302 to 1.4346 today as of 00:42 GMT after climbing to 1.4338. GBP/USD advanced from 1.6200 to 1.6227. USD/JPY went slightly down from 80.25 to 80.18.
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