Today’s FED decision should not have had surprised anybody. No change in the interest rates, the target remains the same, between 0% and 0.25%. The rock bottom rates are still expected to be maintained for an “extended period”, which is not defined. That was widely expected and of the most interest was the language of the statement, seeking for “hawkish” or “dovish” tone. Shortly after the release “experts” dissected the statement and general conclusion was that the FED is more cautious on the recovery than in the past.

Markets response was just like the statement – tepid. Relatively minor moves, which tapered off to nothing at the top of the hour. Surprisingly, though, there was quite a bit of action in hours leading to the news release. The Pound surged, for the second day, Canadian Dollar fell once again. Both of these developments were welcome by me, but even more so was the advance of the Japanese Yen, something I had been waiting for, as covered in the Yuan euphoria short lived post. The cross discussed there was the EUR-JPY.

This pair finally cracked, falling  under the recent support. Trade happened at 111.63, targeting 100 pips. It was closed in early trading, during the Asian session. Frankly, I expected a little faster move, so when the the EUR-JPY finally dipped under 111.00 trade was closed at 110.86, for 77 pips. Few hours later another decent size sell off took place, but no more trades. One could say I missed it.

One of my favorite pairs to trade, USD-CHF is showing signs of ending the intermediate down trend. Might not be a bad idea to go long here on a move above the latest high, with entry at 1.1145. For this particular trade 90-100 pips objective seems reasonable. However, current price congestion has a sideways move written all over it. It means, that the longer the price moves sideways, the higher the chances of the downtrend to resume. For now, though, a buy order makes sense to me, so that’s what it is.

Mike K.