* Euro rallies from one-year low after FOMC decision
* S&P downgrades Spain's credit rating
* IMF sees aid to Greece worth 100 bln-120 bln euros
(Recasts, adds quotes, adds details, updates prices)
NEW YORK, April 28 (Reuters) - The euro rallied against the
dollar on Wednesday after the U.S. Federal Reserve's Open
Market Committee left its benchmark interest rate in the zero
to 0.25 percent range and repeated it will remain low for an
extended period.
In a volatile session. the euro had touched a one-year low
against the U.S. dollar after Standard & Poor's downgraded
Spain's credit rating, snapping earlier bursts of optimism.
S&P cut its ratings on Spain by one notch to AA, citing a
more protracted period of sluggish economic growth than
previously expected. The outlook for the country is also
negative. For details, see [].
"What would generally be considered a slightly
dollar-negative stance by the FOMC is still being overshadowed
by sovereign debt issues in Europe," said John Doyle, senior
currency strategist at Tempus Consulting in Washington. "The
dollar might pare back a bit this afternoon, but generally we
still expect it to be supported against the euro."
In late afternoon New York trade, the euro was up 0.3
percent at $1.3199 <EUR=> after hitting a one-year low at
$1.3114 on electronic trading platform EBS. The low was
$1.3116, according to Reuters data.
Investors took some of the euro's climb as a knee-jerk
reaction to the FOMC announcement on expectations for economic
growth. [].
"This kind of cautious Fed and interest rates near zero are
overall positive for global growth," said Vassili Serebriakov,
currency strategist, Wells Fargo, New York.
News of an imminent aid package to debt-stricken Greece
helped the euro earlier.
The euro rose as high as $1.3268, according to Reuters
data, on news a euro zone/International Monetary Fund aid
package for Greece was imminent and may be worth more than
previously expected.
The aid package for Greece will be worth 100 billion euros
to 120 billion euros ($132.6 billion-$158.8 billion) over three
years, according to IMF Managing Director Dominique
Strauss-Kahn, said a member of German parliament for the
opposition Greens. []
Strauss-Kahn later said details of the plan would not be
available until talks in Athens are concluded. []
Both Strauss-Khan and German Chancellor Angela Merkel said
on Wednesday negotiations with Greece will be concluded in
coming days. []
But the credit downgrade renewed risk aversion on investor
worries the euro zone's debt crisis is spreading. The downgrade
on Spain followed one day after S&P had slashed its ratings on
Portugal.
Analysts said the downgrades on Portugal and Spain reflect
wider credit risks in the euro zone, which could create cracks
in the euro system and further batter the single currency.
"Any aid package now will come in too late," said Win Thin,
a currency strategist at Brown Brothers Harriman & Co. in New
York. "If the help had arrived a couple of months earlier, it
would have prevented the situation from deteriorating further,
not only in Greece but in other countries such as Portugal and
Spain."
The euro has fallen below long-term support levels in recent
months, including $1.3405, a 61.8 percent Fibonacci retracement
of its rally from its 2008 trough to its 2009 peak. This points
to the possibility of further declines. A 76.4 percent
retracement lies around $1.2990.
Elsewhere, the dollar rose to its highest against the Swiss
franc since July 30, 2009, according to Reuters data. It
climbed as high as 1.0924 before retreating to 1.0855, down 0.3
percent on the day.
The dollar gained 1.2 percent to 94.17 yen <JPY=>.
(Reporting by Nick Olivari and Vivianne Rodrigues; Additional
reporting by Steven C Johnson and Wanfeng Zhou in New York;
Editing by Kenneth Barry)
