The Federal Reserve is expected to make an announcement later today, and many Forex traders are waiting to see if a taper is on the way. As a result of this interest, the dollar is mostly rangebound today. Traders are positioning themselves ahead of the Fed announcement, hoping to be able to take advantage of whatever policy is shared.
Right now, many expect that the Federal Reserve will announce a slight drop in its monthly bond-buying program. Right now, the Fed has an asset purchase program in place of $85 billion a month. There are expectations that there will be some sort of reduction. No one seriously expects the Fed to eliminate the program altogether, but a gradual reduction, know as the taper, is expected to be the mode of getting the US economy off stimulus.
For now, the US dollar is rangebound against its major counterparts. To some degree, the start of the taper has already been priced in, but there could be some small surprises that could make a difference. Forex traders are positioning themselves for what could happen next.
At 16:34 GMT EUR/USD is down to 1.3354 from the open at 1.3359. GBP/USD is up to 1.5966 from the open at 1.5904. USD/JPY is down to 99.0100 from the open at 99.1260.
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