By Finexo.com – In an attempt to curb the staggering economy, the Federal Reserve FOMC announced yesterday its decision to reinvest proceeds from its swelling mortgage bond portfolio to buy long-term treasury bonds. Interest rates were maintained at current low values. Coming after weeks of less than promising indicators that have demonstrated the lackluster performance of the US economy, this slight easing is meant to encourage borrowing to further stimulate 
the economy.
As expected, the dollar slipped significantly following the Fed’s decision. However, the greenback countered some of its downward momentum following the release of Japan’s weak forecast on business spending, coupled with the poor performance of Asian equity markets spreading fears of a widespread downturn.
EURUSD
Following the Fed’s decision the EURUSD was expected to reach new multi-month highs after weaknesses across the board. However, after achieving a high of 1.3230 and gaining 150 pips from its lows, the pair nearly reversed all of its daily gains. On a positive note, the pair held slightly above yesterday’s low of 1.3080. Forex traders will be watching the pair to see if this level holds or if it is merely short-term support.
GBPUSD
Two reports released today will affect the GBPUSD, the Claimant Changes (change in number of people claiming unemployment benefits) and the BoE Inflation Report; both are expected to cause volatility on the pair. Recent budget cuts by the new UK parliament have received mostly favorable results among forex traders, but it is unknown how these measures will impact the recovery of the British economy. Today’s reports should shed light on this issue as well as speculate how and when the central bank will apply further spending cuts.
GOLD
Prior to the Fed’s decision, gold prices slumped following a strong dollar. Following the announcement, gold prices rallied above $1,200/oz, as investors sought security against a weakened dollar. Fears of a bigger deficit, more money being injected into the economy, and the devaluation of the dollar following the Fed’s plan to buy government debt, should support higher gold prices.
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