EU session review: Dollar falls ahead of FOMC

Data released:
10:00     UK     CBI industrial order books balance (April)    -11%    +3%    +5%
10:00     UK     CBI industrial output balance (April)    22%    -    27%

The dollar fell against the yen and dropped against the franc on speculation the Federal Reserve will discuss measures to keep yields low to support the economy.
Fed policy makers, who begin a two-day meeting today, may consider measures to support the economy as the end of its $600 billion asset-purchase program approaches in June.
“The Federal Reserve is likely to remain cautious and stress that loose monetary policy will be in place in the foreseeable future,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd.
“We expect the Fed will leave its policy rate on hold,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. “Should Chairman Ben S. Bernanke indicate the Fed is in no hurry to start reversing policy accommodation, further dollar weakness may be on the cards.”
The U.S. central bank will leave its target rate for overnight lending between banks at zero to 0.25 percent at its two-day meeting starting today, according to another survey. The Fed may say it plans to complete the purchase of $600 billion of Treasuries by June.

EUR/USD rose to a new 2011 highs on $1.4652 before Trichet's comments dragged the rate down to $1.4600/05.

GBP/USD gained to session highs on $1.6533 before retreated to $1.6468.

USD/JPY holds within the narrow range between Y81.55/80.

The S&P/Case-Shiller index of home prices in 20 U.S. cities for the 12 months through February fell 3.3%, the biggest decline since November 2009, according to a survey of economists.
US consumer confidence at 1400GMT the highlights though seen overshadowed by Wednesday's FOMC.