On Wednesday as investors braced for the end of a Federal Reserve meeting expected to keep U.S. interest rates at record lows, the dollar edged higher but still remained near a one-year low against a basket of currencies .

Euro fell to session lows versus the dollar

After a French government official said France was worried about the single currency’s strength, the euro fell to session lows versus the dollar.

Dollar index .DXY

In midday trading, the dollar index .DXY, by which the dollar’s value against a basket of six other major currencies is measured, was higher at 76.211, off an earlier low of 75.892, this is a level that is not seen since last September.

This month the dollar has shed 2.5% and investors have been warned by market strategists that any hints from the Fed about future exit strategies might squeeze large short dollar positions.

The flow of dollars into the economy would likely be reduced by a withdrawal of stimulus and it may also boost the currency. The dollar has been on a downward trend since the Fed launched its policy of buying Treasuries in March.

The euro has shown a drop to a session low of $1.4731 EUR=, off a one-year high above $1.48 touched earlier. It was last at $1.4764, dropped 0.2% on the day and has gained 5.6% so far in 2009.

Sterling rose 0.4% to $1.6410 GBP= and the dollar has shown a rise of 0.3% to 91.40 yen JPY=.

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