On Tuesday the U.S. Federal Reserve issued a new $800 billion plan to provide help for homeowners, consumers and small businesses. This move is an attempt to unfreeze the consumer credit markets which have been locked up since the latest financial crisis began in mid-September. Fed officials are hoping that this relief will bring confidence to an economy that has been destroyed by home foreclosures and the lack of consumer spending.

The EUR USD posted another gain after the Fed announced a relief program for consumers. This move served as more evidence that the economy is falling deeply into a prolonged recession. Global investors are also reading this latest influx of cash as potentially bearish for the Dollar in the long-run. As more Dollars get poured into the economy, the chance for inflation increases, thereby weakening the Dollar. Furthermore, based on this week's activity, it appears that the world is no longer considering the U.S. Dollar a safe haven investment.

The GBP USD rallied again on Tuesday as investors demanded higher-yielding assets. Lower U.S. interest rates encouraged traders to dump Dollars that had been bought for safety and liquidity over the last six months. The daily chart indicated the trend had turned up for the first time since August 5. The charts are now indicating the possibility of a rally to 1.7340. The combination of defensive action by the Fed and aggressive action by the Bank of England is encouraging traders to believe that the U.K. will get out of its recession and financial crisis before the U.S.

The USD JPY traded in a choppy range on Tuesday before losing ground. The first rally was triggered by a strong up move in the stock market following the announcement of a consumer bailout package by the Fed. Weaker financial reports helped put in a top about mid-morning and the stock indices never really recovered. Investors returned to the Yen mainly for safety reasons as traders feared another late session hard selloff in the stock market. The direction of the USD JPY should continue to be determined by the stock market. Higher equities will encourage traders to take on more risk and borrow Yen to invest. Weaker stock prices will send traders flocking to the Yen.

The USD CHF plunged sharply lower on Tuesday as traders once abandoned the Dollar. Investors are selling Dollars against Swiss Francs on the perception that the U.S. economy is weaker than recently thought. The announcement of another bailout package by the Fed sent a signal to the investing world that the U.S. Dollar may not be a safe investment at this time. Today's hard selloff came just days after the USD CHF reached a new high for the year. Although the uptrend which began in April is still up, the size of the current break indicates that there is serious selling taking place. Because this market has dropped so hard in a short-period of time, do not be surprised by a fast retracement to the upside. If this impending rally stops short of a new high, then look for new selling pressure to surface.

The USD CAD traded weaker as commodity markets traded a little firmer on Tuesday. The latest bailout package by the Federal Reserve is sending inflationary signals to the commodity markets. Since the Canadian economy relies so much on commodities, higher prices will help it recover from its recent sluggishness. The charts are suggesting that the U.S. Dollar may have topped versus the Canadian Dollar. The charts also show that despite the threat of inflation, the USD CAD may trade in a range for a while before changing the trend to down. Aggressive traders can look at the short-side on rallies.

Actions by the U.S. Federal Reserve on Tuesday encouraged traders to take long positions in the AUD USD. Buying was pretty active as aggressive traders sought out higher yielding assets. Expectations of higher inflation are helping to support commodity prices which should help the Aussie economy recover from its current recession. Technically a double-bottom has formed at .6008 and .6074. A trade through .6693 will confirm the double-bottom and turn the main trend to up. Watch for a possible breakout rally through .6693.

The New Zealand Dollar is bottoming, but the market is not high enough to scare the shorts out yet. Higher commodity markets and stronger appetite for risk is encouraging some traders to cover shorts, but not enough to change the trend to up. The current pattern looks like it is setting up for a big move to the upside as the charts indicate no strong resistance until about .5700. There will probably be one more test of the low to solidify the possible bottoming action. A strong rally in stocks or commodities will most likely trigger the breakout to the upside.

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