LONDON (SHARECAST) - The dollar headed lower after Fed chairman Ben Bernanke’s poured cold water on speculation that interest rates would be increased any time soon. The greenback retreated from an eight month high after Bernanke reiterated that the economic recovery is not yet sustainable and that interest rates would need to remain ultra low for an extended period. A weaker than expected house sales report underlined the rocky road ahead for the US economic recovery. New home sales fell more than 11% in January to a 309,000 unit annual rate, the Commerce Department said. The dollar index, fell to 80.822 from 80.874 on Tuesday. The euro gained around 0.3% to $1.3550 as Bernanke’s testimony temporarily overshadowed concern about Greece’s debt problems. Upcoming cut backs by the Greek government prompted a wave of strikes on Wednesday. The dollar fell to an intra-day low of 89.74 yen, later settling around 90.22 yen. Sterling fell against the euro after Bank of England Monetary Policy Committee member Adam Posen echoed Mervyn King’s comments that the central bank would expand its quantitative easing programme if needed. Sterling rose 0.1% against the broadly weaker dollar at $1.5426.

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