The dollar retraces earlier gains ahead of the FOMC rate decision

By IBTimes Staff Reporter | January 27 2010 6:57 AM

The green currency pared its earlier gains ahead of the FOMC rate decision later on today. The cost of borrowing is expected to remain unchanged at 0.25%, but with the recovery signs that appeared recently in the U.S. there are concerns in markets that the U.S. may exit stimulus faster than expected. The dollar index, which tracks the dollar movements against a basket of major currencies, slipped to a low of 78.39 from a high of 78.69.

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The euro-dollar pair is consolidating on the daily charts after recouping earlier losses, after getting support from the 4-hour and 1-hour charts; however, the pair may continue its bearish pattern that started in December. Later on today Germany will release its CPI for January with expectations to show slight incline. Meanwhile, the pair is traded at 1.4063 after reaching a high of 1.4096 and a low of 1.4019, where the coming support is seen at 1.4000 and next resistance is at 1.4140.

The sterling-dollar pair is showing an incline on the daily and 4-hour charts, after falling earlier to a low of 1.6105. The pound rebounded after announcements from Besley, former policy maker, who said that the quantitative easing methods adopted by the BoE will have a positive effect on the economy. Currently, the sterling is traded at 1.6219 near to strong resistance at 1.6228 where it reached a high of 1.6225, while the pair is moving between support at 1.6075 and resistance at 1.6245.

The dollar-yen pair is showing slight decline on the daily charts, while the 4-hour and 1-hour charts are inclining. The pair fell earlier today to a low of 89.12, breaching support at 89.28 where it is traded at 89.60 after reaching a high of 89.71. The pair is expected to face the coming support level at 89.00, while the resistance is spotted at 91.45.