The greenback continued to take a hit as yesterday’s New Home sales figure spurred speculation that the Federal Reserve will cut its benchmark lending rate by 0.5% this week to prop up the economy. The Fed will announce its rate decision tomorrow at the end of a two-day policy meeting. Interest Rate Futures reflect a roughly 90% chance of a 0.5% rate cut by the Fed this week.

Short-term U.S. interest rates are already among the lowest in the developed world, encouraging investors to borrow in dollars and buy another currency to profit on the difference in yields, which would put pressure on the dollar.

Data showing sales of new U.S. homes declined in December, stoking fears of an imminent economic recession. Purchases of new homes in the U.S. unexpectedly fell yesterday to a 12-year low in December, ending the worst sales year since 1963. Sales decreased 4.7% to an annual pace of 604K, according to Washington Commerce Department.

By now, markets show little willingness to force a dollar bounce ahead of a critical week of U.S. economic developments. We may see the greenback remain in a relatively narrow range against the EUR ahead of the highly anticipated U.S. Federal Reserve rate decision due Wednesday, while similarly critical Non Farm Payrolls data will be due Friday.

Today, the release of the U.S. economic data will likely highlight some of the reasons why traders are ramping up speculation that the country is in midst of a recession. Durable Goods Orders are forecasted to rise 0.1% after falling 0.8 % during the month prior. On the other hand, the U.S. Consumer Confidence is forecasted to fall to a 2 year low.