FX News – September 27: USD Rallies on FOMC Statement

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The greenback gained strength earlier today after FOMC board member Esther George said that the fundamentals of the US economy has improved significantly. In addition, Ms George said that while inflation expectations are "pretty well anchored", she expects the country's labour participation rate to "fall further".

The statement led to the fall of several currencies against the USD. The AUD/USD pair, for example, fell sharply in today's trading. After reaching near-0.9375 levels, it slipped to below the 0.9340 zone. It made a slight recovery over the past few hours and is currently trading at 0.9357.

Initial resistance for the AUD/USD pair is at 0.9384, followed by 0.9407. Meanwhile, initial support is at 0.9320, followed by 0.9297.

The euro also performed poorly against the greenback early in today's trading due to Ms George's statement. In addition, the weakening of the euro has been attributed to uncertainty in Italian politics.

These events led to a drop in the EUR/USD below the 1.3476 zone. However, the pair managed to recover over the past few hours and has risen to the 1.3492 zone.

The EUR/USD pair is currently trading at 1.3490, with initial resistance seen at 1.3510, followed by 1.3544. Meanwhile, initial support is at 1.3449, followed by 1.3415.

The pound, on the other hand, rose sharply against the greenback after BoE Governor Mark Carney was quoted as saying that he does not see a case "for more QE in the UK."

This helped drive the GBP/USD pair above the 1.6100 zone in today's trading. The pair is currently trading at 1.6092, with initial resistance seen at 1.6069, followed by 1.6110. Meanwhile, initial support is at 1.5971, followed by 1.5931.

In terms of events, there will be several coming from the EU, including ECB President Draghi's speech and its September consumer confidence data, while the US will data such as August's personal income figures, and speeches from the Fed.

By FX Strategy Team, Published on 27th of September 2013
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