Today at 19:15 GMT, we are scheduled to see the release of the US interest rate statement. The greenback was… … steady against its major crosses yesterday, as investors waited to see how big an interest rate cut the Federal Reserve will deliver today in its fight against the threat of a U.S. recession.

With the Dow rising as well yesterday, investors look towards bullish behavior of the dollar
ahead of the expected 50bp rate cut, which will likely drive the dollar's value
down. Federal Reserve fund futures were pricing in a roughly 75% chance that the
rate cut will come in at 50bp, with the other quarter allocated to the much more
conservative and unlikely 25bp cut. A hefty cut from the current interest rate of
3.5 % could send the dollar in either direction, as lately it has slipped back
towards record lows hit last year against a basket of currencies.
A rate drop any bigger than 50bp would deteriorate the dollar's yield appeal for
investors. A rate cut of 25bp would service as a medium between keeping with market
expectations and servicing the real needs of the economy.

During yesterday's trading news events from the US came back with mixed results,
nonetheless far better than what was originally expected, giving investors even more
incentive to push the dollar up. Durable goods returned roughly 3% higher than
initially forecasted, as the 5.2% mark, coupled with solid core durable goods
figures gave a much needed boost to the dollar in afternoon trading. National HPI
Composite and Consumer Confidence figures were released as well yesterday to
predicted negative results, preventing any real significant gains in the greenback.

Before the evening release of the US interest rate, we will see several key US
figures. The 15:30 GMT release of ADP Non Farm Employment Change is expected to stay
put at 40K, ahead of Friday's non farm payroll data. Also, an advanced release of
quarterly GDP and the GDP deflator is scheduled to come back with negative results.

If today's economic data comes back with better than expected results, the dollar
and the US economy as a whole will see some much needed relief.

* EUR
The EUR saw a slowdown toward the top of its week long rise against a basket of
currencies, ahead of today's Fed rate cut. As investors turned their attention
across the Atlantic, a small set of Eurozone data was released in line with
expectations, but saw unexpected responses from investors in the market. Eurozone
current account info came back with negative results, which should have resulted in
bearish Euro behavior. Instead, the EUR stayed relatively unchanged against the
dollar, due in large part to the tight monetary policies issued by the ECB. ECB
President Jean Claude Trichets' speech from last week once again reiterated the
hawkish stance from the ECB, as no interest rate cut should be expected in the near
future. This should keep the EUR in line for steady progress in the future against a
basket of currencies including the greenback.

Today there are no events on the European calendar, as all eyes will be focused on
news from the US. We should expect a slight strengthening of the 13 nation currency
today, unless news from the US comes back better than expected.

* JPY
Japan's industrial production rose less than expected in December, as the Japanese
government downgraded its assessment on industrial production. Initial reports
showed a moderate rise in output trends; however the decline in production numbers
resulted in a flattening out of trends. The index for industrial output in December
was released at 111.9, Japan's second-highest reading since January '98, also
reached briefly in August of last year. Industrial production rose 0.7% in December
from a year earlier, as the figure has risen consistently for over 2 years.
Manufacturers' output is expected to drop 0.4% in January and a further 2.2% in
February, according to the survey.

Yesterday, the JPY made gains on most of its major currency crosses, as Asian stock
markets continue to fall ahead of today's Federal Reserve statement. Looking ahead,
Japan will release its Manufacturing PMI today at 23:15 GMT; the data is forecasted
to stay close to last month's figure of 52.3, and should not affect JPY prices by
that much.

It is unclear to how the JPY will respond to today's news events as it has range
traded for most of January.

Technical News
* EUR/USD
The pair is in a consolidation formation on the 4 hour chart, and is accumulating
fresh momentum towards the next bullish move. An upcoming bearish cross might be
forming on the daily chart indicating that the bullish move might not be very strong
and could be subject to a corrective move soon.

* GBP/USD
The bullish corrective move continues with strong momentum, as the daily chart
indicates no sign of a halt. Hourlies studies support the bullish notion, as RSI and
slow stochastic both indicate that the bullish trend might very well continue
uninterrupted. Being on the buy side appears to be preferable.

* USD/JPY
As the pair continues to be traded in relatively tight range, no distinct direction
is being observed on the hourly and daily studies. The pair might continue to linger
in neutral territory until a more distinct signal will be formed. It is advised to
stay out of this one until the smoke of uncertainty clears.

* USD/CHF
The very strong support level of 1.0850 has not yet been breached as the pair shows
some mixed price momentum. The overall momentum is bearish, and traders should pay
attention to a breach of the key support to enjoy a very strong additional bearish
move that might take the pair into the 1.0750 area quite quickly.

The Wild Card
* Gold
Gold is in the midst of a very strong uptrend that shows very small will to stop.
All oscillators support the bullish bonanza, and it appears that an all time high
breach might be quite imminent. This could be a great opportunity for
forex traders to enjoy the road to a record high with very strong profit potential.

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