The heavy volatility and fluctuations returned to the market today with investors returning from the long Easter weekend. The sentiment in Asia was mixed and as the day progressed the focus shifted from fears over the coming feds move to expectations the loose monetary policy is inevitably in place!

We saw early attempts for greenback to count some gains only to see it surrender once again to the expense of its major counterparts. The dollar index returned to trade around its lowest in three years as the speculation mounted over the coming feds move as the FOMC commences their two-day meeting today.

The dollar index which tracks greenback versus the six major traded currencies declined to the lowest of 73.73 from the high of 74.32 and currently hovering around 73.90. The market lacks major fundamentals for today and with the return of markets from the holiday the bets are now placed of the FOMC decision tomorrow and growth figures that follow.

Investors are speculating the outlook for the QE program that is scheduled to end in June and the prudent feds that are assuring stable inflation pressures and the need to keep the loose and dovish monetary policy, and accordingly keeping the dollar and yields lower to the benefit of other major currencies.

The euro was the first to move higher once again, especially with hawkish comments from Trichet, reiterating his view for the need to combat inflation and insure secure inflation expectations so that second round effects do not materialize.

The euro moved again to the upside from the low of 1.4491 to the high of 1.4651, and currently trading around 1.46 areas. The stability above 1.4550 supported the pair to return higher in addition to the positivity from Stochastic and accordingly the prospects for euro gains remain valid.

For sterling, the royal pound is already burdened by its own economic outlook and the delayed expectations for BoE tightening, yet still they remain at better odds with inflation running at 4.0%. Sterling rebounded versus the dollar from the lows reached at 1.6436 but remains still below highs at 1.6531 and now trading bearishly below opening levels at 1.6485.