While the aggressive action taken by the Feds provided a slight boost to investors confident, it was no magic switch as the underlying problems in the US economy are still at president and there are still considerable downside risks to global growth. The slash in rates helped calm the stock market but is still weighting on the dollar.

The European currency climbed slightly against the US dollar as markets continued to worry about a possible US recession. The EUR/USD rebounded after better than expected IFO numbers boosted investors confidence pushing the pair to record a high of 1.4666 and a low of 1.4590. In this case the result had influence the notion of a near term rate as for the time mean the economy continues to expand at a moderate pace allowing the ECB officials to maintain their hawkish stance.

Over in the UK, the mortgage data provide further evidence that the housing market activity is now being considerably undermined by tightening lending practices, adding to the speculation that a rate cut from the Bank of England next month is likely. According to the market, the Sterling Pound looks like its gaining momentum against the US dollar as a result of a weak dollar hence driving the pair to the upside to record at this hour a high of 1.9635 and a low of 1.9501.

Elsewhere, the yen stumbled as Asian stock markets fought back from a drastic sell off after the Feds surprisingly cut interest rates increasing investors risk appetite to sell the Yen and hold on risky positions. At this hour the dollar is gaining gradually dragging the USD/JPY pair along with to record a high of 106.92 and a low of 105.96

Despite Tuesday's rate cut, a looming recession remains a major concern occupying the minds of market participants with some traders stating that the Feds move may not ease the US economy which in hand could keep the dollar struggling. If things remain the same in the upcoming days then the markets may be fully priced for a further cut in rates at the policy meeting ending on Jan 30.

Some traders' believe that a further significant cut of 50bp could smooth worries about the US economy hence could make the dollar appear more tempting while pressuring the Yen. However let's don't disregard the importance of the US data today as the economy will furnish data on Initial Jobless Claims and Existing Home Sales