The pair closed in NY Wednesday at $1.3685 after a volatile reaction to the Fed’s announcement to taper QE by $10bln pm. Rate initially dropped to $1.3705 but quickly rallied back as any hawkish feel was quickly quashed by counter dovish comment that saw rate rally back hard to $1.3811. Failure to build saw rate reverse, the corrective pullback gained momentum in thin conditions to extend lows to $1.3674. Rate recovered to $1.3705 before resuming easing into the close. Easing continued into Asia. $1.3675/70 provided early cushioning before heavy sales of euro-Aussie filled this interest and extended lows to $1.3768. Rate recovered to $1.3694 before it met euro-yen linked supply. Rate retested the earlier low and was then punched down to $1.3650 on reported North Asian lifer supply. Rate recovered to the broken support at $1.3668 ahead of the European open. Bids remain into $1.3650 with system stops on a break of $1.3640. Offers to $1.3680, a break to open a move back toward $1.3700/05. Continued analysis of the Fed move, and any official reaction, in focus. US data to the fore as further tapering data dependent. Weekly jobless claims, Phila Fad and existing home sales later.
