The Federal Reserve cut the main U.S. interest rate target to a range of 0 to .25% (record lows), surprising markets and giving traders the green light to sell the U.S. Dollar across the board. The Fed also said it will do anything it can to help the economy employing all available tools, to do so. In addition it said, Weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time. The Dow rallied on this news, closing up 360. Oil was relatively unchanged in the face of the OPEC meeting later today (17th).
Our Focus Today:
Euro: Obviously Euros trend higher continues. With the break of 1.4040, we see 1.4160-70 as the 50% retracement from Julys high of 1.6035-40 to Octobers low of 1.2330. This also happens to be the high of October 1st, the day after it fell over 400 pips. We were long for this target area, with a tight stop of 1.4035, and took profit at 1.4130. The high we saw was 1.4145 bid, and this may qualify as a test of that 50% retracement. We wait to see reactions from Japan and European sessions.
GBP: In NY session, we bounced off the resistance of 1.5510-20 on first test, dropping to 1.5435 before going through on the top side and touching 1.5645. Given the size of the moves on the way down in late October/early November, next previous high comes in at 1.5700, and we see that target being reached as well soon after Europe sees the FED news. We look to the MPC meeting minutes tonight.
Yen: Our resistance line at 90.72 held well, and at NY close we are right at 88.70. We would like to sell USD/JPY rallies to 89.40, for a retest of last weeks thin Asia market low around 88.10-20, before testing August 1995s low of 87.75.
AUD: Aussie came close to .7000 and we look to OPEC tomorrow to see how the market reacts to their actions. We suspect the .7030-40 resistance will hold for now. A break of that should see .7200.