Euro Update

Two weeks ago, when EUR/USD was trading in the 1.25s, I wrote that I thought the pair may have a chance to reach 1.32s. Unfortunately, my analysis never materialized in the blog and I wasn't able to document my reasons. Today, following the FOMC meeting and comments, the pair blew through that level and nearly hit 1.3500, pausing 3 pips below, still trying to find a good place to settle as I write this. The FOMC meeting comments pionted towards a more aggresive quanititave easing policy than the market expected, allowing more bad debt to be purchased.

"The Committee decided today to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months".

We'll see if this works. In the meantime, let the algos do their work while we, humans, attempt to figure out where the rate may be tomorrow.