FOREX: US Fed holds interest rate. Dollar advances to 6 month high versus Euro.

By CountingPips.com

The U.S. Federal Open Market Committee concluded its monetary policy meeting today by holding the U.S. interest rate steady at its record low level. The FOMC had cut the federal funds interest rate to the target range of 0 percent to 0.25 percent in December 2008 and today’s decision to keep the rate unchanged was widely expected by market forecasts.

The Fed statement was without major surprises and exhibited a more upbeat tone on the economy than previous releases. The statement said that, “economic activity has continued to strengthen and that the deterioration in the labor market is abating. Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.”

One of the most eagerly awaited parts of the statement was whether the FOMC would give any hint on when the interest rate level might change. Today, the statement gave no such indication and used the same language as in the past, saying the rate is likely to remain at “exceptionally low levels” and for “an extended period.”

Today’s decision was not a unanimous one as Kansas City Fed President Thomas M. Hoenig disagreed with the other nine FOMC members. According to the report, Hoenig thought the “economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.”

US Dollar gains in Forex Trading, reaches 6-month high against Euro

The U.S. dollar has been stronger in forex trading today against the other major currencies after the Federal Reserve’s interest rate announcement today. The dollar has gained today versus the euro, Japanese yen, Canadian dollar, Swiss franc, New Zealand dollar and the Australian dollar while falling against the British pound as of 5:16 pm EST according to currency data by Oanda.

The U.S. stock markets finished the day on a positive note with the Dow Jones gaining by 22.83 points, the Nasdaq increasing 12.77 points and the S&P 500 up by 3.43 points for the day.  Oil edged down by $1.06 to $73.65 while gold declined by $13.50 to trade at the $1,084.40 per ounce level.

EUR/USD Daily Chart – The Euro has continued its decrease versus the US Dollar today in forex trading and fell to its lowest level in over six months. The EUR/USD has fallen by approximately 50 pips today and traded under the 1.4000 level for the first time since July 15th as the pair hit a low of 1.3992. This pair has maintained its current downtrend since touching its January highpoint on January 13th at 1.4579 and has descended by approximately 550 pips in just about two weeks. The EUR/USD trading under the 200-day simple moving average (dark blue) below.