Bernanke Announcement Prompts US Dollar Rally

Yesterday’s policy announcement from the Federal Reserve is boosting the US dollar today as Forex traders look to the removal of a drag on the currency.

Yesterday, the Federal Reserve’s FOMC completed a two-day policy meeting and Fed Chair Ben Bernanke described the policy decision from the body. Bernanke said that if the economy continues to improve, the Fed could begin tapering its asset purchase program by the end of this year, and that quantitative easing could be at an end by the middle of next year.
The news, while prompting a sharp decline in stocks (a rout that is still in effect today), has sent the US dollar higher against its counterparts. In many cases, other major central banks are heading in the opposite direction. The ECB is still talking about easing, and other economies are flagging while the US economy shows signs of recovery — albeit slow recovery.
US dollar index is rallying, and the greenback is higher in its individual currency pairs. If the quantitative easing really is getting close to an end, and if the economy improves enough that inflation prompts interest rate hikes, the US dollar could be strong for a relatively long period of time.
At 14:38 GMT EUR/USD is down to 1.3195 from the open at 1.3294. GBP/USD is down to 1.5478 from the open at 1.5484. USD/JPY is up to 97.6680 from the open at 96.4465.

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