Commodity currencies shine in light of ultra dovish FOMC announcement

EUR/USD

Range: 1.3091-1.3134
Support: 1.2920
Resistance: 1.3170
In its statement last night, the Federal Open Market Committee (FOMC) pushed back the guidance regarding the likely timing of the first hike in the Federal funds rate target. The FOMC is now indicating that it expects economic conditions to ‘warrant exceptionally low levels for the Federal funds rate at least through late 2014’ versus the previous guidance of ‘mid-2013.’ In addition, the statement also emphasised that the stance of policy is ‘highly accommodative’. Not much in the way of data today as the pain index in euro shorts remains bid. Technically a close above 1.3150 today signals a potential move to 1.3260-1.3290. Traders are wary of chasing this move and prefer to fade euro/commodity rallies as the European debt crisis is not fixed.

USD/JPY
Range: 77.50-77.83
Support: 77.30
Resistance: 78.30
The US yield curve dips after the FOMC, with the US Fed targeting a 2% inflation. But some traders are surprised at how shallow the dip in this pair has been, especially with the volume of buying that has been seen this week since the weak release on Tuesday of Japanese trade data. So we ask ourselves, ‘has the yen’s long term prospects changed with the 200-day moving average at 77.30 holding firm after the FOMC?’ Traders may look to trade any break out of 77.30-78.30.
GBP/USD

Range: 1.5649 – 1.5678
Support: 1.520
Resistance: 1.5750
Sterling is still seen with a bid tone by traders after a GDP print of -0.2% yesterday, but with some market speculation that the next round of QE from the BoE could be less than £75 billion the dips continue to remain shallow. The FOMC was ultra dovish and as such the US dollar was sold across the board in the New York session. EUR/GBP managed to hold the 0.8305/10 level yesterday, but with the Greek debt crisis not yet resolved, rallies could fade.