The initial reactions to the Fed decision: Dollar higher. Stocks lower. Yields higher.

The FOMC is a bit more hawkish with the inflation shift. More specifically, the Fed said:

• December: “Inflation has made progress toward the Committee’s 2 percent objective but remains somewhat elevated.”
• January: “Inflation remains somewhat elevated.”

• Key Change:
  • December: Acknowledged progress toward the inflation target.
  • January: Removed reference to progress, focusing instead on inflation remaining elevated, signaling ongoing concerns.

Looking at the key FX rates:

• EURUSD is back below the 50% retracement area near 1.0404 and the 200 hour MA at 1.04138. The price low rearched 1.0392. The next target is the low for the day at 1.0381. The low from last Thursday at 1.0371. 1.0354 is the 50% of the move up from the January low. What you dont want to see is 200 hour MA at 1.04138
• USDJPY: The USDJPY has moved higher but found sellers at the 100 hour MA at 155.434. The price is at 155.32. The price needs to get and stay above that level and then the 200 hour MA at 155.70, to increase the bullish bias. Support remains at the 38.2% of the move up from Dec at 154.939 and down to low of swing area at 154.77. MOve below would be more bearish.
• GBPUSD: The GBPUSD remains below the falling 200 hour MA on the 4-hour chart at 1.2445 and the 50% of the move down from Dec. at 1.2453. Stay below is more bearish. On the downside the low for the day at 1.2391 is target followed by swing area and 200 hour MA between 1.2351 and 1.2375.

The US major indices are lower:

• Dow industrial average was down -0.17% or -74 points just before the release. The index is down -229 4 or 0.51% currently.
• S&P index is down -31.81 points or -0.52% before the release. The index is down -49.99 points or -0.82% currently
• NASDAQ index is down -165.82 points or -0.84% before the release. The index is now down -217.90 points or -1.10%.

In the US debt market:

• 2 year yield was at 4.2258%. It is currently at 4.252%.
• Five year yield was at 4.355%. It is currently at 4.390%.
• 10 year yield was at 4.556%. It is currently at 4.587%.
• 30 year yield was at 4.794%. It is currently at 4.814%.

This article was written by Greg Michalowski at www.forexlive.com.