Tuesday, 16 Mar 2010

Market Awaits Fed Statement as USD Looses Ground Against Counterparts

Ahead of the latest Fed Statement regarding short term U.S. interest rates, the greenback has lost some of the gains it made yesterday against both the Euro and British Pound. Currently EUR/USD is trading at 1.3714, up 50 pips from earlier this morning. Similarly, GBP/USD is up well over 100 pips in the same amount of time.

Investors are eagerly awaiting the Fed statement, set to be released at 18:15 GMT. While it is not expected that U.S. interest rates will be increased in the near future, traders should look for any positive statements regarding the pace of the U.S. economic recovery. In the past, an optimistic Fed outlook has led to significant Dollar gains, and there is no reason to believe the same could not occur today.

Looking ahead to tomorrow, traders will want to pay careful attention to U.S. Fed Chiarman Bernanke's congressional testimony. Depending on today's statement, Bernanke may seek to either calm investor fears or lend support to a positive U.S. economic outlook. Either way, the Dollar will likely see some heavy fluctuations.