The dollar fell on Wednesday, weighed down by comments from Federal Reserve officials this week about the need to keep the U.S. central bank's economic stimulus in place, and on caution ahead of a Senate confirmation hearing on Thursday at which Fed Chair nominee Janet Yellen is expected to speak.
The euro, however, stayed resilient, rising even although European Central Bank Executive Board member Peter Praet said the ECB could start buying assets or cut its deposit rate into negative territory to trigger a rise in inflation to the central bank's target.
In the United States, there is a growing sense that a reduction in the Fed's stimulus may not be in the cards in the near term. Atlanta Fed President Dennis Lockhart, seen as a centrist in policy terms, and Minneapolis Fed President Narayana Kocherlakota both suggested on Tuesday that the current state of the U.S. economy still warrants aggressive monetary policy action. Their comments pressured the dollar.
Added to that was the uncertainty surrounding Yellen on Thursday. Most investors expect Yellen to be dovish and continue the policies of current Fed Chairman Ben Bernanke.