The dollar edged up against the euro

The dollar edged up against the euro and yen on Tuesday after better-than-expected data on U.S. consumer confidence and durable goods orders prompted traders to close out some of their bets against the greenback ahead of today’s interest rate decision by the Federal Reserve. Financial markets expect the central bank to reduce rates by at least 0.25% today; however, market consensus currently calls for a more aggressive 0.5% cut. In the event the Fed adopts a more hawkish stance, cutting rates by the bare 0.25% minimum, a short-term dollar rally is likely to occur.

Data wise, U.K. Consumer Credit is out at 09:30 AM GMT, followed by Core PCE, GDP, and Personal Consumption in the Unites States. The Fed’s rate decision is scheduled for 07:15 PM GMT.

 
Euro | Japanese Yen | British Pound

 
Euro
 
The EUR/USD opened in Asia around $1.4775 after a very quiet US trading session. The pair traded in a $1.4760/76 range as the market moved sideways ahead of the FOMC decision later today. Traders feel that the EUR/USD might ease at some stage during the European session due to doubts being cast on the inevitability of a 50bp cut today. The strong US data yesterday shifted Fed Fund futures from pricing in around a 90% chance of a 50bp cut to pricing in around a 60% chance.

Support: 1.4820, 1.4770, 1.4740 
Resistance: 1.4880, 1.4920, 1.4960 
 
Euro | Japanese Yen | British Pound 

 
Japanese Yen
 
USD/JPY fell from an early high of ¥107.18 to ¥106.68 on EUR/JPY selling in Asia, before inching up to ¥106.70 ahead of the European session open. The pair will be heavily influenced by today’s decision, with a 0.25bp cut probably signaling extended weakness for the pair, due to disappointed stock markets and the ensuing carry trade liquidation. If the Fed does cut by 50bp it should push U.S. stocks higher and the USD broadly lower with the JPY being one of the main beneficiaries.

Support: 106.00, 105.50, 105.00 
Resistance: 106.60, 107.30, 107.80 
 
Euro | Japanese Yen | British Pound 

 
British Pound
 
The GBP/USD opened around $1.9890, and dipped to $1.9884 before EUR/GBP selling and GBPY/JPY buying flows gave the pair a lift and pushed it up to $1.9919 at one stage. The pair then proceeded to settle at around $1.9900 for the balance of the session.

Support: 1.9820, 1.9720, 1.9660 
Resistance: 1.9880, 1.9920, 2.0000 
 
Euro | Japanese Yen | British Pound