Forex – Dollar Falls to Day’s Lows, Euro Muted after Inflation Data

© Reuters. Dollar falls to day’s lows, euro muted after inflation data – The dollar pulled back from four-month highs against a currency basket on Thursday, as investors took profits following its recent run higher after the did little to alter market expectations for further interest rate rises this year.

The , which measures the greenback’s strength against a basket of six major currencies, was down 0.32% to 92.30 by 06:22 AM ET (10:22 AM GMT), backing away from Wednesday’s highs of 92.66, which was the strongest level since December 28.

The Fed, in a statement released after its two-day policy meeting acknowledged a recent pick-up in inflation, but gave no indication that it will accelerate the pace of rate increases in response.

The statement did little to alter market expectations that the Fed will deliver its second rate increase of the year when it meets in June.

Markets were turning their attention to Friday’s U.S. employment report for April, which could provide further signs of strength in the world’s largest economy.

The dollar slipped lower against the yen, with down 0.31% to 109.50, backing away from the three month high of 110.03 reached on Wednesday.

The euro was higher but came off the best levels of the day after data showing that slowed unexpectedly in April, underlining the case for the European Central Bank’s caution in removing stimulus measures.

was last at 1.1984 after rising as high as 1.2009 earlier.

The pound pared gains after data showing that activity in the UK service sector last month, but remained subdued. The report did little to alter the view of investors that the Bank of England will leave interest rates unchanged at its upcoming meeting next week.

was up 0.15% to 1.3595, holding below an intra-day high of 1.3630.

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