U.S. DOLLAR INDEX (DXU6)
The DX opened higher at 86.20 as traders continue to 'cover' shorts and adjust positions ahead of Thursday's much anticipated rate decision. A rate increase has been discounted, but now the question is will it be 25bp or 50bp. After sliding to a morning Lo of 86.15, prices moved higher after the crude oil spiked higher on a drawdown of reserves, sending the DX to a morning Hi of 86.52, before drifting to 86.42 as we begin the afternoon session. The DX bounced to an afternoon Hi at our secondary Resistance level of 86.46, where traders took profit/risk off the top, sending prices lower into the close of 86.27, up 17 tics. The s/t trend remains 'positive' and traders will continue to 'adjust' positions ahead of the 2:15 pm EST release of the FOMC results. Will it be 25bp or 50bp? Longs should tighten 'stops' or purchase a 'put' to withstand volatility and reduce exposure. Expect wide swings as 'specs' adjust. A lower open may find Support at 86.11 and 85.94, while an open above 86.31 should find Resistance at 86.48 and 86.68.

 
CANADIAN DOLLAR (CDU6)
The CD opened lower at our initial Support level of .8919 and rose to a morning Hi of .8926, before pressure from a stronger DX sent prices to a morning Lo of .8894. Prices rebounded, on the bounce in energy prices, to .8918 as we head into the afternoon session. As the DX retraced, the CD rose to a daily Hi of .8941, before closing at .8933, down 4 tics. With rate increases on 'hold', the CD must seek help from higher energy/metal prices and/or a lower DX to improve. The s/t trend remains 'negative' with over-sold momentum indicators that are looking at the Target Lo of .8880 to hold, otherwise a number of sell-stops could send prices tumbling. A higher open should find Resistance at .8951 and .8970, while an open below .8923 may find Support at .8904 and .8876.

 
BRITISH POUND (BPU6)
The BP opened lower at 1.8242 and bumped up to a morning Hi of 1.8244, before following most other major foreign currencies lower to as the DX strengthened on futher short-covering. Prices fell to a morning Lo of 1.8170, before bouncing to 1.8192 at the start of afternoon trading. The BP continued higher to an afternoon Hi of 1.8222, before closing at 1.8220, down 43 tics. The s/t trend remains 'negative' as momentum indicators struggle to improve at the 50% Fib Ret level of 1.8163. A break below this Target Support level could see further selling. A higher open should find Resistance at 1.8253 and 1.8285, while an open below 1.8211 may find Support at 1.8179 and 1.8137.

 
EURO-CURRENCY (ECU6)
The EC opened lower at 1.2642, touched the morning HI of 1.2643 and retraced to a morning Lo of 1.2585 as the DX continued higher. Prices bounced to 1.2601 as we enter the afternoon session. The EC continued higher into the close to end the session at 1.2626, down 30 tics. The s/t trend remains 'negative' as momentum indicators reflect the indecision of traders ahead of the FOMC results. A higher DX could see a test of the Target Lo of 1.2550, while a disappointment for the DX should see a strong rally for the EC. A higher open should find Resistance at 1.2651 and 1.2676, while an open below 1.2618 may find Support at 1.2593 and 1.2560.

 
JAPANESE YEN (JYU6)
The JY opened lower at .8702 and rose to a morning Hi of .8710, before retracing to a morning Lo at our initial Support of .8682 as we begin the afternoon session. As the DX retraced, the JY bounced to a close of .8692, down 12 tics. The JY continues to trade at the consolidation Support level, hoping the .8678 Target Lo of 6/23 can hold. Competition from higher rate increases and higher oil prices continue to challenge the JY. A stronger DX could see the JY head to the .8622 low of 4/13. A lower open may find Support at .8679 and .8667, while an open above .8695 should find Resistance at .8707 and .8723.