Tuesday October 12, 2010 - 23:02:06 GMT
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EUR USD Rebounds Higher Following Fed Minutes
The EUR USD is trading higher, bouncing
back after a sharp decline earlier in the session. The rally in the Euro is in
reaction to the news that the Fed is getting ready to move quickly in applying
This afternoonâ€™s Fed Minutes said that
several Federal Reserve officials thought that it would â€śsoonâ€ť be appropriate
for a second round of quantitative easing (QE2) to boost the economy.
The major change in the Fed language since
the release of the Federal Open Market Committee statement on September 21 was
changing the phrase â€śbefore longâ€ť to the word â€śsoonâ€ť.
Although no price tag was put on the QE2
package, alluding to a time period was considered to be bad for the Dollar.
Two issues that the Fed seemed to be
concerned about were how to communicate any new stimulus to the public and the
steps to lift inflation expectations.
Fed officials also discussed specific ways
to target inflation, target a path for the price level rather than the rate of
inflation and target a path for the level of gross domestic product without an
No forecasts were prepared for this
meeting, but the FOMC did trim their growth estimates for 2010 and 2011.
Technically, the Euro was on its way down
and nowhere near any key support levels when it turned around. This indicates
that todayâ€™s short-covering rally was news driven. A trade through 1.4028 will
reaffirm the uptrend.
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