During early European deals on Wednesday, the US dollar declined from a 6-day high against the European currency and a 2-day high against the Swiss franc. On the other hand, the US currency extended its Asian session gains versus the British pound, while remained down versus the Japanese yen.

The US dollar lost ground after hitting a 6-day high of 1.3420 against the European currency at 4:35 am ET Wednesday. The dollar is currently trading at 1.3488 against the euro with 1.374 seen as the next target level.

The euro strengthened despite a report showed that German business confidence fell to a record low in March. A monthly survey from the Munich-based Ifo Institute for Economic Research showed that German business confidence deteriorated to 82.1 in March from 82.6 in February. This was the lowest reading since the survey began in 1991. The expected level for March was 82.2.

The index measuring current situation worsened to 82.7 in March from 84.3 last month. However, the index stood above the expected reading of 82.5. On the other hand, the expectations index rose to 81.6 from 80.9 last month. Economists were expecting a reading of 81.5 for March.

In addition, Italy's economic think tank ISAE said consumer confidence in the economy declined in March after rising in past two months. The consumer confidence index fell to 99.8 in March from 104 recorded in February. Economists had forecast the reading to decline to 103.

Against the British pound, the US currency extended its Asian session gains during early European deals on Wednesday. At 5:00 am ET, the greenback reached a high of 1.4582 against the pound, compared to 1.4683 hit late New York Tuesday. On the upside, 1.445 is seen as the next target level for the US dollar.

The US dollar that hit a 2-day high of 1.1332 against the Swiss franc at 4:30 am ET today weakened thereafter. At 6:15 am ET, the dollar-franc pair was quoted at 1.1272, compared to Tuesday's closing value of 1.1321. If the pair falls further, 1.112 is seen as the next target level.

Against the Japanese yen, the greenback traded down during today's early deals. The dollar-yen pair that closed Tuesday's New York deals at 97.87 touched a low of 97.37 at 2:35 am ET. The next downside target level for the pair is seen around 96.9. The US currency is presently trading at 97.60.

The Ministry of Finance said that Japan saw a merchandise trade balance of 82.4 billion yen in February, marking the first surplus in five months. The February figure came in better than expectations for a 13.7 billion yen deficit following the revised record 956.9 billion yen shortfall in January. The original figure came in at -952.6 billion yen.

Meanwhile, the Bank of Japan Deputy Governor Hirohide Yamaguchi said today that Japan's economic and financial conditions will likely continue to be severe. Addressing business leaders in Otaru, Yamaguchi said at this point, the central bank is giving higher priority for securing market stability and facilitating corporate financing, which are the second and third main areas of the BoJ's conduct of monetary policy.

Traders now look forward to the New York session, in which the US Commerce Department is set to release its durable goods orders report at 8:30 am ET. Economists look forward to a 2% decline in the durable goods orders for February.

At 10:00 am ET, the Commerce Department is due to release its new home sales report for February. The consensus estimate calls for a decline in new homes sales to 300,000.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 am ET.

Cleveland Federal Reserve Bank Sandra Pianalto is due to deliver a speech on forces for economic recovery Regional Growth Partnership luncheon in Maumee, Ohio at 12:20 pm ET. Meanwhile, San Francisco Federal Reserve Bank Janet Yellen is scheduled to deliver a speech to the Forecasters Club of New York on the U.S. economic situation and policy responses in New York at 12:30 pm ET.

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