ForexSpace.com - Forex news looked on with muted enthusiasm as global shares nudged higher and the greenback hit a three-week low against a basket of currencies today after the Federal Reserve’s Federal Open Market Committee (FOMC) signaled its willingness to step in if the US economy waned.

The USD dollar weakened further as Fed boss Bernanke appeared to keep QE3 firmly on the table. There were no surprises in the decision to hold interest rates at their record low of 0.25 percent until at least the end of 2014.

The FOMC did raise its growth outlook a tad, but remains convinced that unemployment – though forecast to fall to between 7.8 percent and 8 percent by the last quarter of 2012, from between 8.2 percent and 8.5 percent as forecast in January, will remain well above target by the end of 2014.

This, as Rabobank strategist Philip Marey opines, “means that there is scope for further monetary easing down the road, especially if the recovery falters.”

At the post-FOMC data release press conference, helicopter Ben did his best to put a lid on what a previous chairman might have termed ‘irrational exuberance’ about the US economy. He certainly played down the more hawkish elements of the statement and interest rate expectations. Thus, the dollar index (DXY) edged down to 78.96, and hit a seven-month low against the CAD.

Those betting on a break below 1.30 against the euro or above 85 against the yen have their work cut out.

Putting things into perspective in terms  of risk assets, Andrey Dirgin, Head of Research at Forex Club tells us how “today will be a day of contemplation for the markets; digesting both Bernanke’s comments as well as UK growth figures. Risk assets have been supported by the suggestion by the Fed chief that further monetary stimulation could be on the cards,” says Dirgin.

“One would expect that most currencies will keep a positive sentiment during the day, and the focus now turns to the BOJ meeting tomorrow, which comes just ahead of a series of holidays in many major centres next week.”

So far we’ve seen eurodollar at 1.3221 in early trading; light demand on risk will probably keep the  currency pair supported during the day, though we wouldn’t expect the break above the 1.3280 level. As far as cable is concerned, the pair opened the Asian market at 1.6166, aiming to break the nearest resistance level. Cable already reached the 1.6180 level,” says Andrey Dirgin, “and if it can find a positive catalyst in the market, the next target will be 1.6230.

We have good expectations about GBP, given the strength it shows even after GDP came out below forecasts. The figures from the construction industry seem to have dampened expectations, but it is not unthinkable that the data will be revised upwards in a few weeks’ time,” Dirgin concluded.

The next significant test for the USD/JPY, eagerly awaited by forex traders and top forex brokers alike,
is tomorrow’s Bank of Japan's board decision, focused on its asset-purchasing program, with speculation already rife as to the likelihood of enlarge its easing efforts. If the BoJ decide not to increase the size of the asset buying program, the yen could jump higher.

This could have a big impact on the rate differential between the US and Japan, which is a key driver of USDJPY. As Kathleen Brooks (pictured), research director at FOREX.com, tells me:

“The last time the BOJ pumped stimuli into the economy in February it caused the yen to weaken substantially. We expect a move tomorrow to weaken the yen, although it may not have such an effect as it did back in February.”

 Drew Hillier. Editor