The dollar dropped to a one-week low against the euro with speculation on what the Federal Reserve plans on doing with interest rates.

There is speculation that the central bank will most likely keep its benchmark rate close to zero and stay on course with its USD300 billion program of Treasury purchases. Also, the dollar has dropped to a one-week low against the euro on the speculation that the Federal Reserve will not be increasing the interest rate. The US currency weakened one percent to USD1.4013 per euro and touched USD1.4027, the lowest since June 15. The euro is not the only currency the dollar weakened against today, because the yen's exchange rate strengthened 0.2 percent to JPY96.69.

The Federal Reserve is hesitant to free up lending in credit markets through the purchasing of debt (from government notes to mortgage-backed securities) because rates on US 10-year notes and 30-year mortgages rose to 4 percent and 5.59 percent. The spike in percentages took place on June 11 and is the official high for the year.

At this moment the market is worried that the Federal Reserve will put a damper on yields, which will take away support from the dollar. The dollar's susceptible look can be attributed to the markets fears and concerns. Credit Suisse has chimed in supporting that they see ways the Federal Reserve can salvage some concerns, but do not think they will get enough support to salvage the dollar.

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