By Allison Bennett April 27 (Bloomberg) -- The dollar erased its decline against the euro after touching a 16-month low versus the shared currency on speculation the Federal Reserve may signal it will hold interest rates low to support the U.S. economy after its bond-buying program expires in June. The greenback pared its drop against most its major counterparts before Fed Chairman Ben S. Bernanke gives his first press conference following a policy meeting. The yen weakened versus the euro and dollar after Standard & Poor’s cut Japan’s outlook to negative. “It looks like a wave of dollar short covering, which we knew we would get at some point before the statement,” said Ray Attrill, a currency strategist at BNP Paribas SA in New York. “The dollar has moved at the same time and the same amount against Canada, yen, euro, so probably it’s nothing more than short covering.” A short is a bet an asset may fall in value. The dollar was little changed against the euro at $1.4649 at 11:03 a.m. in New York. It earlier fell as much as 0.4 percent to $1.4714, the weakest level since December 2009. The yen slipped 1.4 percent to 121.13 per euro, from 119.42. Japan’s currency declined 1.4 percent to 82.68 versus the dollar. --Editors: Dennis Fitzgerald, Paul Cox To contact the reporter on this story: Allison Bennett in New York at abennett23@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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