Forex Update - USD

The USD traded in a narrow range of 1.2716-1.2741 against the EUR and 116.13-116.54 against the JPY.

Japanese stocks ended the morning session slightly higher while oil prices fell 17 cents to $67.15 after the bearish U.S. inventory report.

Federal Reserve Bank of San Francisco President Janet Yellen said that inflation is likely to stay above the Fed's comfort zone for quite some time and could take "several years" to come back.

However, she also said that slowing growth would help bring back inflation over time. And with the lags in policy, Yellen added that the full effect of past actions haven't been seen, yet. By pausing, which she thinks was a "good idea", the Fed allows itself more time to observe the data and to gauge "how much, if any additional firming is needed to pursue its dual mandate".

There is still a risk that the USD could get some support, threatening the key 1.2680-95 area, technicians highlight in EURUSD.

Fed President Pinalto speaks at 1400 GMT on inflation, inflation expectations and monetary policy.