The euro appreciated sharply vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3340 level and was supported around the US$ 1.3120 level. Some dominant themes emerged during the North American session. First, the Federal Open Market Committee decided to keep its federal funds rate target between 0% and 0.25%. The FOMC reported €œInformation received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term. In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.€ The Fed€™s decision was unanimous. Second, former Fed Chairman Volcker reported no systemtically important U.S. banks will fail. This comment was made before the results of the current stress tests are made known on Monday. It is already being reported that Citigroup and Bank of America are likely to be told to raise a significant amount of additional capital with some whispers indicating BoA may need to raise an additional US$ 70 billion. Third, the U.S. Q1 gross domestic product declined an annualized 6.1%, more-than-expected. In eurozone news, EMU-16 economic sentiment indicator improved to 67.2 in April from a record low of 64.7 in March, the first improvement since May 2007. European Central Bank President Mersch talked about the ECB€™s ability to change monetary policy further, saying €œWe have made all the parameters of our framework more flexible and maybe there is still a small margin in this area for decisions to come. But also in the framework of our principal instrument, which is short-term interest rates.€ Many dealers believe the ECB will initiate quantitative easing in May. It was also reported that German new plant, machinery orders were off 35% y/y. Additionally, EMU-16 March private sector loan growth eased to 3.2% following a 4.3% annualized growth rate in February. These data confirm the credit crunch has reduced bank lending substantially. M3 money supply growth fell to 5.1% in March from a downwardly revised 5.8% in February. ECB member Stark reported €œthere is no evidence in the euro zone of imminent deflation.€ Euro bids are cited around the US$ 1.2765 level.