AUD/USD: 0.9470EUR/USD: 1.3730The Fed has held rates steady at 0-0.25%, kept the economic stimulus in place, and has said that it will await ‘more evidence’ before QE tapering can commence. The net result of all this has been precious little so far, although the doves must be disappointed, with the Euro remaining pretty much rangebound but currently pushing the day's lows at 1.3725.
The Euro has now hit a low of 1.3695 and bounced, with the WSJ’s Hilsenrath adding to the downside pressure by stating that December tapering is not yet off the table.
Below the strong support at 1.3710, and now today's 1.3695 low, the Euro would head back into the consolidation area between 1.3500/1.3680, with the first Fibo levels to be found at 1.3658 (23.6% of 1.3125/1.3830) and then at 1.3552 (38.2%).
While on the topside, we need to get back above 1.3800, and further resistance would then be seen Friday’s high at 1.3833 (61.8% of 1.4939/1.2041) which is going to be tough to break. If /when this happens, then 1.3867 (4 Nov 2011 high) will be the next hurdle, beyond which, there is more minor resistance at around 1.3920 and then not too much until 1.4000.
It now looks as though month end flows will dominate trade in the absence of any major data in the session ahead, although the BOJ decision is coming up and might push Eur/Jpy around a bit. I remain fairly neutral here but still fancy that we might see some mild US$ strength in the days ahead, but would not get too carried away on either side and would suggest 1.3680/1.3780 might well cover it today.
Economic data highlights will include:
EU CPI, Unemployment, US Jobless Claims Chicago Purchasing Managers Index
