The dollar fell against the Yen and EUR Wednesday after data showed sales of new U.S. homes fell sharply in January, raising doubts about the U.S. economy and causing investors to reduce exposure to risk. Sales of newly built U.S. single-family homes unexpectedly fell to a record low in January, dropping 11.2 %. As a result, the EUR/USD shot up over 30 pips before correcting itself. Currently the pair is trading around the 1.3490 level. Similarly, the USD/JPY pair fell almost 80 pips, pushing the oft-traded currency pair to 89.60.

The greenback also remained under selling pressure on expectations that U.S. interest rates will stay at very low levels for some time, following comments by Federal Reserve chief Bernanke on Wednesday. Low interest rates make the dollar less attractive to investors than higher-yielding currencies, stocks and commodities. In addition, the economic recovery does not appear to be improving at the speed many investors were hoping for, and currencies appear to be tracing the movement of stocks as a result.

Looking ahead to today, the most important economic indicators scheduled to be released from the U.S. are the Unemployment Claims and Durable Goods Orders at 13:30 GMT. Traders will be paying close attention to today's announcement as a stronger than expected result may boost the USD in the short-term. Traders are also advised to follow Federal Reserve Chairman Ben Bernanke's testimony at around 14:00 GMT. This testimony is very important as it is very likely to impact the Dollar's volatility. Traders are advised to watch closely, as this is likely to set the pace of the dollar going into the rest of the week's trading.