The dollar reached the weakest level in a month against the euro after the Federal Reserve extended its pledge to hold its target for the federal funds rate low until late 2014 amid a “highly accommodative” monetary policy.
The euro slumped for a sixth week, the longest stretch of losses versus the dollar since 2010, as the stripping by France’s top credit rating by Standard & Poor’s magnified concern the region’s financial turmoil will intensify.
The euro dropped against the majority of its most-traded counterparts as concern increased that the region’s leaders won’t be able to contain the sovereign-debt crisis after Fitch Ratings put France on negative outlook and said six other European nations may be downgraded.
The franc fell against the euro and the dollar after Finance Minister Eveline Widmer-Schlumpf said a panel is considering measures, including capital controls and negative interest rates, to weaken the Swiss currency.
Canada’s dollar rose to a three-year high versus its U.S. counterpart and approached the strongest level since 1950 as speculation the global economic recovery is quickening fueled investor appetite for higher-yielding assets.
The euro may be poised to advance to the strongest level against the dollar in more than two months as it approaches a critical level after breaking through another one, according to online currency-trading firm Gain Capital.