Afternoon Forex Overview

The dollar extended losses on Wednesday, falling from an eight-month high, after Federal Reserve Chairman Ben Bernanke told a congressional committee the U.S. economic recovery is not yet sustainable, and interest rates are likely to remain low for an extended period.

The dollar index (DXY), which measures the U.S. unit against a trade-weighted basket of six major currencies, fell to 80.388, down from 80.874 in late North American trading Tuesday. It traded at the highest since June on Tuesday.

The euro jumped to buy USD1.3619, up from USD1.3534 on Tuesday, when it closed near the lowest since last May.

The dollar turned lower against the Japanese yen after Bernanke's remarks. The greenback bought 89.93 yen, down from 90.21 yen.

Bernanke said there are some positive signs on the outlook but the job market remains "quite weak."

The last time Bernanke released public comments, in written form due to a snowstorm, was on Feb. 10, a little more than a week before the central bank announced a surprise 25-basis-point hike in its discount rate, to 0.75%.

Traders also noted earlier that Federal Reserve Bank of St. Louis President James Bullard said late Tuesday that interest rates could be kept on hold through this year if the economy performs as expected.

Market expectation

Currency analysts warned that the euro is likely to retain its downside bias amid ongoing fears over Greece's fiscal outlook.

EURGBP - Spanish bank seen buying euro-sterling as the pair pops to fresh highs for the day near stg0.8810, this pair continuing to whip around after a morning dip to stg0.8750 reversed sharply.

EURUSD pops through USD1.3600 for quick prints to USD1.3615 and flushing some stops above USD1.3610. Offers eyed USD1.3635.

The dollar-yen is still heavy traders say as cross-yen sales continue in the market. The Dow Jones has eroded most of its earlier gains and there are more reports coming in from traders of stops layered in dollar-yen sub JPY89.30 the base of the daily Ichimoku cloud. The market is currently JPY89.84.