The Japanese yen and U.S. dollar advanced against majors after the Fed announcements yesterday cause a wave of pessimism thereby reducing investor's risk appetite.

The Fed announced yesterday the continuation on bond purchasing to spur growth after the slowdown witnessed in the second quarter, which increased speculations the Fed would keep borrowing cost near zero till the middle of 2011.

The downbeat trade data from China dovish Fed announcements are providing clues that global recovery will wane in the second half of the current year.

What added to concerns is the inflation report released by the BoE which revealed that BoE lowered growth forecasts from 3.6% to 3.0%, while it said inflation will fall below the 2% target in the coming couple of years.

Accordingly, European shares plummeted, trailing losses in Asia, and yen and dollar continued their rise.

Concerning the euro-dollar pair, it fell for the third day to 1.3010 after the breach of 1.3100 and 1.3050 to hit a low of 1.3009, while it recorded a high of 1.3186. For the rest of the day, the pair is expected to move between support and resistance at 1.3030 and 1.3080 respectively.

In the absence of economic data today from the euro area today, euro is doing a downside correction after touching three-month high against the dollar ahead of the release of the awaited second-quarter GDP data due later in the week.

Turning to the sterling-dollar pair, it fell sharply on the daily and four-hour basis after the dismal inflation report. The report showed that growth may retreat in the second half of the year, especially after the weak news concerning July, which also may increase speculations that the 1.1% recorded in the second quarter may be subject to downside revision.

Currently, the pair is trading at 1.5692 after recording a high of 1.5870 and a low of 1.5664, while it is expected to move between support at 1.5600 and resistance at 1.5785 for the rest of the day.

With regard to the dollar-yen pair, it is showing decline on the daily charts as fears in markets enhanced demand on the yen as a refuge. So far, the pair is trading at 84.89, reporting a high of 85.46 and a low of 84.86, whereas support is seen at 84.20 while resistance is at 85.90.