The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3725 level and was capped around the $1.3815 level. As expected, the Federal Open Market Committee yesterday kept its benchmark federal funds target rate unchanged at 0.25% and global equity markets received the news well under the premise that inflation will not be a problem for some time. The markets are largely speculating the Fed will not begin to raise interest rates until Q4 at the earliest with many economists expecting no change until 2011. Kansas City Fed President Hoenig dissented again, reporting that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability. Fed Chairman Bernanke is expected to testify before Congress soon and tell legislators that the Fed is the ideal oversight regulator for large and small banks alike. Traders are also awaiting to see if the Obama health care initiative can be passed by Congress before the Easter break and how financial regulatory regulation materializes, possibly encompassing the so-called Volcker Rule. Comptroller of the Currency Dugan said he has significant concerns with Senator Dodd's proposed financial regulation overhaul. Data released in the U.S. today saw MBA mortgage applications decline 1.5% while headline February producer price inflation was off 0.6% m/m and up 4.4% y/y. The ex-food and energy core index was up 0.1% m/m and 1.0% y/y. In eurozone news, EMU-16 construction output fell 2.2% m/m in January, down from +0.5% growth in December, and was off 12.5% y/y compared with a 3.1% y/y decline in December. Eurozone finance ministers this week reiterated their plan to take coordinated action but did not provide much additional information other than to suggest any assistance would take the form of bilateral loans rather than loan guarantees. Euro bids are cited around the US$ 1.3335 level.