Today, September 18th is the day that forex traders have been waiting for since mid-August, as the Federal Open Market Committee will meet and announce their interest rate decision at 18:15 GMT. At this point, it is no longer a question of whether or not they will cut, but by how much. Currently, the Fed needs to decide on what kind of action it wants to take, an aggressive 0.50 % rate cut which may be considered as a stiff intervention and it could have far-reaching implications on the market or on the other hand, a 0.25 % rate cut which might be already embodied in the current market price. We have to mention that the third alternative which would be that the Fed will leave the rates unchanged however unlikely that may be. In reality, Chairman Bernanke will probably be more concerned about recession risks so taking this road will be highly risky for the conservative Chairman and his staff. Furthermore, this rate decision has been built up so much that anything less than a 0.25% rate cut has the potential to send equities and forex carry trades plummeting, while the greenback would likely fall sharply against currencies like the EUR and GBP. Alan Greenspan (the former Fed Chairman) said the odds of a recession have grown since earlier this year, even though "the economy is not doing badly at this stage." Additionally MR. Greenspan added yesterday that: "US future economy seems pretty gloomy", however it might be a prominence for launching his new book so we need to put everything in proportion. Regardless, Tuesday promises to bring substantial volatility and a break away from range trading. Bottom line, a greenback recovery is closer then it looks.

Yesterday, the EUR experienced a flat trading session against the USD, as markets await the FOMC rate announcement. Interestingly, former Chairman of the Federal Reserve Alan Greenspan noted that the EUR could replace the USD as the world's primary reserve currency as quoted by a German Magazine. On the data front, the German ZEW survey is set for release, with views that the figure will be at 75 for the month of September, down from the previous 80.2. Generally today's trading session will be fueled by the USD rate announcement and more likely the EUR will react to the USD developments today.

The effect of the global liquidity crisis, which has recently most been felt in the UK, is causing traders to look to unwind risky one way bets against the JPY and therefore the JPY gained 0.3 % against the EUR and the greenback. Traders said that Japanese investors are not really concerned about the Northern Rock situation, adding that much of today's selling was simply a reaction to Friday's short-covering gains.

The September Reuters Tankan survey showed that the ongoing global credit crisis and domestic political instability are having a major impact on Japan's corporate sentiment. Japanese manufacturers' business sentiment worsened to a two-year low in September, while the diffusion index for non-manufacturers was unchanged, matching the low seen in December 2004. Japanese bond prices remained well supported by the survey throughout the Asian morning. Overall the USDJPY traded with a low of 114.68 and a high of 115.37 before closing the day at 115.10 in the New York session.