“It could be a turning point for the dollar,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon. “It’s very unusual for a sitting Fed chairman to talk about the dollar explicitly.’”

In fact, the dollar did rise to a two week high against the Euro and the Yen. Analysts seemed to be happy about what Bernanke said, but were still remaining cautious about over optimism. The dollar has faced a lengthy and brutal decline. Is this the start of the road back up or just a false start?

We’ll know more in the next few weeks, as investors react.

Is Bernanke subliminally flipping the world “the bird”?

The Fed said it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent.

The Fed action was the most dramatic signal it can send that it is concerned about a potential recession in the United States. It marked the biggest one-day move by the central bank in recent memory.

The Fed decision was taken during an emergency telephone conference with Fed officials on Monday night. Those discussions occurred after global financial markets had plunged Monday as investors grew more concerned about the possibility that the United States, the world’s largest economy, could be headed into a recession.

The Fed has been cutting rates nearly continuously, despite increasing fears of inflation. The thought is that cutting the Fed Fund rate will encourage lower interest rates on credit cards. It might also encourage more people to save, promoting higher CD Rates. With the world’s largest economy on the skids, it would only take a slight push to send the world into a global slowdown. These latest measures are designed to stop such a skid. Only time will tell if the strategy is sound.