Market Overview |
Written by ActionForex.com |
Sep 18 13 18:35 GMT
Dollar Dives as Fed Refrained from Tapering, DOW Hit Historical High
Dollar tumbles sharply after Fed kept rates unchanged at near zero level and said it will maintain the pace of asset purchase at $85b per month. That is, in contrast to market expectations, no tapering. The accompanying statement noted that FOMC "decided to await more evidence that progress will be sustained before adjusting the pace of its purchases." The statement also warned that even though downside risks have diminished, "the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement" in the economy.
EUR/USD broke through 1.3451 resistance after the release and could now pave the way back to 1.3710 resistance next. GBP/USD also took out 1.6 psychological level decisively and is heading back to corresponding resistance at 1.6380. While USD/JPY also dives on the news, cross selling in yen on risk appetite is limit USD/JPY's downside for the moment. Meanwhile, DOW jumped to new historical high of 15664.82 so far and 10 year yield dropped back to as low as 2.735 level at the time of writing.
Technically, dollar's sharp fall took out 80.75 near term support and indicates that the fall from 84.75 has resumed. Next target is 80.50 support. Note that a strong break there will be and important sign of medium term to long term trend reversal. That is, the whole up trend from 1011 low of 72.69 is possibly over and would pave the way to 78.91 support for confirmation.