Dollar drops ahead of FED rate decision

The Dollar continues to fall across the board as the market expect the Federal Reserve to cut interest rates to an unprecedented low.  Right know the consensus is the FED will cut its target rate by 0.5%  today from the current 1%. ( statement is at 19:15 GMT)

Although there is a considerable amount of market players who predict the Fed will cut  rates even more aggressively from 1% to 0.25%.

Investors will also search for any indication the Fed will resort to alternative policies (besides rate cuts) in their statement today. The so called quantitative easing by buying up government debt.  Any indication the Fed might support this approach in the near future can hurt dollar sentiment at this moment.

The words and actions of this Fed meeting might stimulate more dollar selling or on the other hand stop the momentum of its drop, all depends of course, on how the market will perceive the outcome.

Key levels to take notice of:

EURUSD is getting closer to a daily resistance level around 1.3890

USDJPY is currently trading around 90, rumors of possible intervention might trigger some buying in case we go any lower.

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