EUR USD Rebounds Higher Following Fed Minutes

The EUR USD is trading higher, bouncingback after a sharp decline earlier in the session. The rally in the Euro is inreaction to the news that the Fed is getting ready to move quickly in applyingquantitative easing.

The EUR USD is trading higher, bouncingback after a sharp decline earlier in the session. The rally in the Euro is inreaction to the news that the Fed is getting ready to move quickly in applyingquantitative easing.

This afternoon’s Fed Minutes said thatseveral Federal Reserve officials thought that it would “soon” be appropriatefor a second round of quantitative easing (QE2) to boost the economy.

The major change in the Fed language sincethe release of the Federal Open Market Committee statement on September 21 waschanging the phrase “before long” to the word “soon”.

Although no price tag was put on the QE2package, alluding to a time period was considered to be bad for the Dollar.

Two issues that the Fed seemed to beconcerned about were how to communicate any new stimulus to the public and thesteps to lift inflation expectations.

Fed officials also discussed specific waysto target inflation, target a path for the price level rather than the rate ofinflation and target a path for the level of gross domestic product without aninflation adjustment.

No forecasts were prepared for thismeeting, but the FOMC did trim their growth estimates for 2010 and 2011.

Technically, the Euro was on its way downand nowhere near any key support levels when it turned around. This indicatesthat today’s short-covering rally was news driven. A trade through 1.4028 willreaffirm the uptrend.

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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