The dollar is weaker in early afternoon trading on Wednesday in New York, plunging to its lowest levels in nearly two weeks against the euro and sterling. Meanwhile, the buck moved away from a five-week low posted against the yen on Tuesday.

Mostly disappointing U.S. gross domestic product data was largely shrugged off, fueling some of the risk appetite on the day as equities and higher yielding currencies rallied.

Data from the U.S. Department of Commerce showed that while consumer spending rebounded in the first three months of the year, the headline reading on first quarter GDP contracted by much more than expected.

Meanwhile, the Federal Reserve concludes its two-day meeting on Wednesday, with the Federal Open Market Committee due to announce the results of the meeting at about 2:15 pm ET. The Fed is widely expected to leave key interest rates unchanged near zero.

Traders are also keeping an eye on the spread of the swine flu and its potential impact on the global economy, with the World Health Organization expected to lift its threat level yet again.

The greenback extended its losing streak against the euro, plunging to 1.3307 in early afternoon trading, its lowest level in over two weeks. With the retreat, the dollar continues to move away from a monthly high of 1.2884, set last week.

The buck is now approaching another support level of 1.3387, set earlier in April.

Traders considered a positive consumer sentiment reading from the Eurozone, prompting interest in the higher yielding currency.

A survey conducted by the European Commission showed that Eurozone economic sentiment rose to 67.2 in April from a revised reading of 64.7 in March, the first significant increase since May 2007. The index came in above the expected reading of 65.6.

Also on Wednesday, the German government said the economy will grow 0.5 percent in 2010, benefiting from stimulus measures and recovery of exports.

However, the government also said that the economy will shrink 6 percent this year, the worst contraction since the World War II, and sharper than a 2.25 percent fall predicted in January.

Against the pound, the buck snapped out of a trading range, falling to a 12-day low of 1.4799. With the move, the dollar is moving towards its January low of 1.5070, set April 16.

The greenback snapped its losing streak against the yen, rising to 97.00 on the day. The move came after the buck plummeted to 95.62 on Tuesday, setting a five-week low. The dollar leveled off since hitting a 3-month high of 101.43 yen on April 6th.

On the U.S. economic front, an advance GDP report from the Department of Commerce showed that the U.S. economy contracted at an annual rate of 6.1 percent in the first quarter compared to a 6.3 percent drop in the fourth quarter. Economists had been expecting a more modest decline of about 4.7 percent.

A steep drop in private inventories played a big part in the sharper than expected contraction in GDP, with the drop in inventories subtracting 2.8 percentage points from first quarter GDP.

Earlier this morning, President Barack Obama addressed the swine flu outbreak, as the first U.S. death from the influenza strain was confirmed. He assured the public that the government is fully dedicated to stopping the spread of the disease, noting the $1.5 billion request for emergency funding he sent to Congress Tuesday.

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