Here’s an update on technicals, fundamentals and what’s going on in the markets.

Buying treasuries or mortgage based assets lowers yields and is supposed to encourage people to lend more from banks and stimulate the economy.

The Fed has already made a commitment to keeping rates steady until the middle of next year.  The expectation is that the forecasts could enhance this even further, by signalling steady rates until at least the early part of 2014.

Ilya Spivak of DailyFX discusses China, the effectiveness or ineffective of the QE operations all over the world, the high dependency of the Swiss franc on the developments in Europe and more in the interview below.

This coordinated action had a strong impact on currencies, and sent EUR/USD back to the range seen last week. This range lasted until the failed German bond auction. How long will this rally last? Looking at the last central bank cooperation, the answer is: not too much. The ECB hasn’t used its real ammunition yet.

EUR/USD dropped before the release to 1.3775, within levels seen during the day. Earlier in the day it climbed and challenged resistance at 1.3838. It extends these drops after the release of the statement but doesn’t go too far. The press conference is awaited.

For the first time since June, the statement will be followed by a press conference by Ben Bernanke. A lack of big announcements in the statement can be complemented with a press conference that can trigger high volatility.

The disappointment is also being registered in the typical risk plays, with the Aussie down nearly 2% since last night (AUD/USD flirting with parity) and the yen proving to be the more resilient on the majors.  The intention is that borrowing costs are lowered for businesses and households, via the decline in longer-dated Treasury yields.  This is no panacea though.  The US ten year is already at 1.80%, so the downside is starting to look limited and short-term borrowing costs could well increase.

The statement published on Wednesday, 18:15 GMT will be closely watched and will likely move the markets for quite some time. Here are 7 scenarios for this important event, and the expected impact on the dollar.

An additional challenge for the Fed Chairman is that some of his fellow policy officials are becoming increasingly uncomfortable with the extraordinary risks that the central bank are running, in terms of both credibility and long term inflation. Quite rightly, many Fed officials maintain that Washington should be doing more to reduce America’s fiscal obesity through a root-and-branch review of entitlements and a program of structural reforms designed to raise productivity and growth potential.