U.S. Dollar Hits Highest Level This Month Ahead of Fed Decision

Profit-taking and position squaring aheadof this afternoon’s Federal Open Market Committee decision is helping to drivethe U.S. Dollar to its highest level this month. There is still uncertaintyregarding how the Fed will act later today. Some investors are looking for aclear decision to renew quantitative easing.

Profit-taking and position squaring aheadof this afternoon’s Federal Open Market Committee decision is helping to drivethe U.S. Dollar to its highest level this month. There is still uncertaintyregarding how the Fed will act later today. Some investors are looking for aclear decision to renew quantitative easing. Others believe that the Fed willonly change the language in its statement acknowledging the economy is slowingdown.

The Fed is walking a thin line with today’sdecision. It has to be careful not to spook the markets by acting too hastily.Furthermore, it must act with clarity and conviction in order to instillconfidence in the markets that it is on the right path.

The Euro changed its main trend to downthis morning on the daily chart when it crossed the last swing bottom at1.3119. If pessimism prevails after the Fed decision and investors continue toshed risky assets, then look for the start of a serious correction to a major50% price level at 1.2605.

The British Pound also changed its dailytrend to down when it broke a swing bottom at 1.5819. After finding resistanceat a .618 price level at 1.5967, it is possible it may try to establishshort-term support at the 50% level at 1.5635. If this area fails, then lookfor a move to 1.5400. Traders turnednegative on the Sterlingfollowing a drop in home prices. With this leading indicator turning bearish,traders fear that the start of planned spending cuts and the implementation ofnew taxes may have a negative effect on the economy.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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