The Euro is obviously very much fixated on the FOMC minutes tonight

EUR/USD

Range: 1.3991 – 1.4046

Support: 1.3950

Resistance: 1.4080

The Euro is obviously very much fixated on the FOMC minutes tonight, with the short term direction of the currency very much dependent on the decision made tonight. The pair continues to maintain its ascending channel, which has remained since the end of October. However when the Fed chatter settles, perhaps the market will start to take note of the record highs in Irish yield spreads and reports that the ECB supposedly bought the nation’s debt.

GBP/USD

Range: 1.6010 – 1.6046

Support: 1.5962

Resistance: 1.6105

With a holiday in Japan, the election results coming out in the US and the FED decision on monetary policy later on, most pairs have been confined to tight ranges as investors remain cautious. Cable is no different being confined to a 30 pip range at the time of writing. Yesterday the only data of note was construction activity which hit an 8-month low. Cable traders will have to wait not only for tonight but also for tomorrow and the BoE’s interest rate decision, after these we will get a far better idea of longer time direction of the currency pair.

The FOMC Decision

In one of the most widely anticipated FOMC meetings the market consensus is virtually unanimous regarding the Fed’s QE2. Its implementation is taken as given, which shifts talk to “how much”. The range for global asset purchases has been very wide ranging from between $100 billion all the way to $500 billion. Goldman Sachs have even produced a report suggesting that the figure could be in the region of $2 trillion. The large amount of uncertainty is of course what is driving the speculation.

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