Rumors of ECB/Fed intervention, Buying EUR/Cross, Massive Short-Covering

WASHINGTON -(Dow Jones)- The U.S. Federal Reserve Wednesday declined to comment on speculation that the European Central Bank and other major central banks are preparing to intervene in the foreign-exchange markets to prop up the flagging euro.

The ECB also declined to comment earlier Wednesday. The market speculation comes as traders are circulating a report from a U.S. think tank that is said to note that the Group of Seven leading industrial nations are concerned about the speed of the euro's decline against the U.S. dollar.

The report is also said to note that major central banks may be preparing a verbal intervention to support the currency "if the rout continues."

The euro rebounded from four-year lows against the dollar Wednesday on the market speculation. At 10:15 a.m. EDT, it was trading at $1.2320 compared with $1.2144 earlier Wednesday.