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Euro edges lower ahead of FOMC minutes

Started by PocketOption, May 28, 2024, 04:44 am

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Euro edges lower ahead of FOMC minutes


The euro is slightly lower on Wednesday. EUR/USD is down 0.17%, trading at 1.0836 in the North American session at the time of writing.

Will Fed minutes be hawkish?

It has been a light data calendar in the US, with no tier-1 events until Thursday. This has put the focus on Fedspeak, with a host of FOMC members delivering public remarks. The Federal Reserve minutes of this month's meeting will be released later today, and the markets will be looking for insights into future rate policy.

The Fed has maintained its benchmark rate at 5.25-5.50% since last July and has been forced to shelve plans to lower rates due to first-quarter inflation data, which not only has been hotter than expected but has actually moved higher. This has complicated the Fed's battle to bring inflation back down to the 2% target.

In recent weeks Fed members have been delivering essentially the same message - rates need to remain in restrictive territory until there is evidence that inflation will remain sustainable at low levels and caution is the name of the game.

This week has brought more of the same from Fed members. Fed members Christopher Waller and Loretta Mester said they needed to see several more months of inflation moving lower before they would support rate cuts. The Fed is trying to downplay expectations of a rate cut, with the markets pricing in a cut in September at 63%, according to CME's FedWatch.

If the minutes reiterate the hawkish stance that we have been hearing from FOMC members, it will be another reminder that Fed is no rush to lower rates and that could give the US dollar a boost.

EUR/USD Technical

  • EUR/USD is testing support at 1.0843. Below, there is support at 1.0792

  • There is resistance at 1.0921 and 1.0972

Source: Euro edges lower ahead of FOMC minutes