By | February 24 2010 6:16 PM

The NY session brought about a rollercoaster ride in the currency market, on the heels of what was a rather lackluster overnight session. Bernanke came out on the dovish side but was perhaps a little less forceful than the market had anticipated in terms of the outlook for the Fed target rate. It was actually more of the same as the Chairman basically said that the Fed target rate will remain low for an extended period of time. He also reaffirmed that the recent increase in the discount window rate was not a shift in policy. The bid tone to equities on Bernanke's confirmation that the punchbowl will indeed remain in place initially helped EUR/USD stretch gains towards 1.3625/30. In the end, this would prove but another in a long list of short-squeezes as the pair promptly collapsed nearly -100 pips into a NY close by the 1.3535 zone. The rally in the equity space did help gold (XAU/USD) carve out an intraday bottom at $1090 and the precious metal should now see better momentum buyers on a break above the $1098 zone. This also kept the so-called commodity currencies supported despite what was an overall US dollar positive tone.