Subject: FOREX-Dollar sells off on Fed statement; euro at 6-wk high - Reuters
From: "Michael Andrews" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, "Devon Archer" <[email-masked]>, "Eric Schwerin" <[email-masked]>, "Curt Hastings" <[email-masked]>, "Neil Callahan" <[email-masked]>
Date: Tue, 21 Sep 2010 16:20:21 -0400

FOREX-Dollar sells off on Fed statement; euro at 6-wk high

Tweet This
Share on LinkedIn
Share on Facebook
Related News
Dollar falls below 85 yen after Fed statement
2:55pm EDT
Instant view: Fed still "prepared" to support economy
2:47pm EDT
Instant view: FOMC still "prepared" to support economy
2:35pm EDT
FOREX-Euro up after debt auctions; dlr slips before Fed
7:57am EDT
FOREX-Euro up after debt auctions; dlr slips before Fed
6:48am EDT
Analysis & Opinion
Speculators and China win big on yen move
ANALYSIS-Brazil may be outgunned in fight to weaken currency
Related Topics
Currencies »
Global Markets »
Tue Sep 21, 2010 4:03pm EDT
* Dollar sells off vs euro on Fed statement

* Dollar falls below 85 yen

* Aussie at two-year high vs dollar

(Rewrites, adds details; updates prices)

NEW YORK, Sept 21 (Reuters) - The dollar fell sharply against the yen  
and euro on Tuesday after the Federal Reserve suggested it stood ready  
to further stimulate the U.S. economy, raising fears it may print more  
dollars to do so.

The euro surged to a 6-week high against the dollar and broke above  
its 200-day moving average for the first time since January,  
suggesting more gains were ahead. The yen powered higher against the  
greenback as well, breaking through the 85 level for the first time  
since Japanese authorities intervened to weaken the currency last week.

The Fed statement suggested the U.S. central bank may be preparing to  
do more to keep unemployment from rising and prices from falling. The  
sentiment confirmed investors' fears ahead of the meeting.

The Fed made no shift in monetary policy at the end of a one-day  
meeting, although it expressed greater concern about the sluggish pace  
of economic growth and uncomfortably low inflation than it had when it  
last met in August. For more, see: [ID:nN20109053].

"Bottom line, the Fed may have to do more in terms of stimulus before  
the end of the year, and that is obviously pushing yields lower," said  
Joe Manimbo, currency trader at Travelex Global Business Payments in  
Washington. "In turn it makes returns on dollar-denominated assets  
even less attractive."

In late afternoon trading in New York, the euro was up 1.3 percent at  
$1.3238 EUR= after climbing as high as 1.3281, its highest since Aug.  
9, according to Reuters data.

As long as the euro holds above the $1.3030 area, some technical  
analysts see its Aug. 6 high of $1.3334 on EBS as an upside target.  
The high, according to Reuters data that day, was $1.3333.

The euro also breached technical resistance at its 200-day simple  
moving average.

Long-term moving averages are stronger resistance levels in this  
instance. Once breached, the new level would become long-term support  
for the currency.

The 14-day simple moving average crossed the 50-day simple moving  
average, using Reuters analytics, which is also bullish for the euro  
in the near term,

"It seems that the U.S. economy is at that point where the Fed is  
actually closer to easing monetary policy," said Nick Bennenbroek,  
head of FX strategy at Wells Fargo in New York. "So we have seen the  
dollar sell off against the euro."