EURUSD in Focus with Federal Reserve Minutes

The release of the latest FOMC minutes will put the EURUSD in focus on Wednesday. 

EURUSD – Daily Chart

EURUSD – Daily Chart

EURUSD broke down from the recent uptrend resistance and has found support at the 1.0722 level.  

The FOMC minutes come ahead of the Thursday market in Hong Kong, but traders have time to position. The outcome will determine whether this euro bounce is sustainable or whether we see a retest of support. 

The US dollar firmed against other major currencies in the Asian session on Tuesday as traders await the FOMC minutes, which are due to be published on Wednesday and will likely offer hints about further monetary policy. 

Markets are still betting that the Federal Reserve will ease its monetary policy by 25 basis points in 2024 as early as June. However, the broader market was restrained after China held its key interest rate at the same level despite hopes for stimulus to bolster the struggling stock market

Starting in March, the Fed was expected to lower its short-term interest rate by 150 basis points this year. But following a strong jobs report, an uptick in manufacturing activity, and an unexpectedly high January inflation post, markets are now betting on a rate cut in May with odds of 50% that it will happen. 

The market has largely priced in a year of lower rates, so tensions in the Middle East or Ukraine could lead to the Fed holding steady. The onset of the Ukraine conflict created supply chain issues and an inflationary surge, and there is still no sign of peace in the region.

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