Global FX: Major Pairs Surge

In reaction to the Fed's decision not to taper QE, which weighed heavily on the USD, market participants scaled back expectations of higher rates in the euro zone, which saw the 1y1y EONIA swap rate fall sharply to its lowest level since early August, testing the 100-DMA line in the process. Consequently, both EUR/USD and GBP/USD advanced to their highest levels since late January as risk appetite returned. In terms of technical levels, supports are seen at the 30-day upper Bollinger level at 1.3490, 1.3453 (Aug-20th high) and then at 1.3399 (Aug-28 high). On the other hand, resistance levels are seen at 1.3660 (Feb-4 high)

GBP/USD
Even though the pair finished the session sharply, GBP underperformed EUR throughout the session after the latest retail sales data from the UK failed to meet analyst expectations. The ONS said that drop due to sharp fall in food sales. Technically, support levels are seen at 1.6008 (Jan 18th high), 1.5893 (Sep-18 low) and then at 1.5886 (Sep-17 low). On the other hand, resistance levels are seen 1.6182 (Jan-11 high), 1.6255 (Jan-3 high) and then at 1.6380 (2013 Jan-2 highs).

USD/JPY
Even though bond yields fell sharply in reaction to the Fed’s decision no to taper QE, the surge higher by EUR/JPY ensured that the pair finished the session higher. In terms of Japan-specific commentary, BoJ board member Kiuchi said the BoJ's two-year time frame is too short in meeting its 2% inflation target. Also, Japanese PM Abe instructed his finance ministry to include a two-stage lowering of corporate taxes in economic stimulus measures that would kick in if the consumption tax is hiked in April as expected. Technical studies indicate that support levels are seen at 97.88 (Sep-19 low), the Ichimoku Cloud base at 97.65 and then at 97.45 (Aug-29 low). On the other hand, resistance levels are seen at 99.54 (Sep-16 high), 99.98 (Sep-13 high) and then at the psychologically important 100.00 level.