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The U.S. Dollar was under pressure all day on Wednesday as the Federal Reserve considers additional monetary policy easing amidst growing concerns that the economic recovery is poised to derail.

The Euro surged to the upside again overnight as investors shrugged off sovereign debt concerns in Ireland and Spain while choosing to focus on the weakening U.S. economy and the possibility of another round of quantitative easing by the Fed. Short-term oversold technical factors may be the only reasons for a near-term correction.

The British Pound finished slightly lower in choppy trading. The Sterling posted a potential closing price reversal top on Tuesday after a Bank of England official called for additional quantitative easing. The topping pattern hasn’t been confirmed yet mostly due to the size of the Tuesday’s range.

The Japanese Yen traded better but off its high. A better than expected Tankan report helped drive the Yen higher versus the Dollar, but investors expressed caution about the report since the forecast for December is indicating a weaker Japanese economy.

Investors are concerned that the Bank of Japan may have to ease further at next week’s meeting since a weakening economy will mean the central bank’s forecast for a recovery next year may have to be reassessed.

The intraday trade this morning suggests that some traders are looking for another round of intervention ahead of next week’s meeting.

Today, many of the major players were absent ahead of Thursday’s U.S. GDP report. This report should be a market mover. The preliminary guess is for a growth rate of 1.6%. A number lower than this figure is likely to crush the Dollar. A better than expected number should trigger a rally in the Dollar against most of the majors, especially the Euro. Many traders who have priced in a weak number will be forced to pare their long positions.

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