After Ben Bernanke and the U.S. Federal Reserve Bank announced a new and much more aggressive effort to stimulate the U.S. economy and job creation, the U.S. Dollar Index once again touched on a 4-month low versus a basket of currencies, striking 79.134 .DXY. The Euro also hit a 4-month high on the news, moving to $1.3016 on the EBS trading platform before settling back to $1.3008 at around 1:04 p.m. (JST), still a gain of 0.2% from late trade in the U.S. Analysts are clearly divided on the Euro’s moves at this point, with some believing that support can still be found in the short term, while others believe that the break above $1.30 will be all the momentum that the common currency can muster as a strengthening Euro will put unwelcome pressure on the Eurozone economy.
Though speculation on the Fed’s moves has been varied, in the end the central bank announced that they would begin asset purchases of $40 billion each month and continuously until such time as the U.S. labor situation improved markedly. They also announced that the ultra low interest rates would remain in place into 2015 at a minimum, even if there is an economic recovery.