EUR / USD changed little and is trading above 1.1900 following the FOMC Minutes

• EUR / USD did not show much of a reaction to the recently released FOMC Minutes and continues to trade just above 1.1900.
• The Minutes showed that the Fed maintains optionality with respect to adjustments to its QE program, which may reinforce expectations for action in December.

The EUR/USD it continues to trade not far below the day’s high and comfortably above 1.1900 following the release of the FOMC Minutes from the November 4-5 meeting, which did not elicit a significant market reaction. On the day, the pair is trading with gains of more than 20 pips or around 0.2%.

EUR / USD does not respond to FOMC Minutes

The Minutes for the November 4-5 FOMC meeting have just been released and did little to stimulate market reaction. At the November FOMC meeting, members kept the option of future changes to their asset purchase program, the topic of which has been the main focus of markets in recent times, saying it could alter the pace, maturity or duration of purchases in the future. Many members favored an improved guide to buying bonds rather early, while “several” others expressed concern that a significant expansion in asset holdings could have unintended consequences.

While the minutes are now out of date, given that the meeting took place before this month’s positive vaccine news, by opting to retain optionality regarding adjustments to its QE program, the Fed may bolster expectations for action. at the December meeting. This, in line with the more subdued tone recently adopted by FOMC members (given the lack of fiscal stimulus and the rise in virus cases), is likely to influence the USD going forward.

Moving on to the ECB; Both ECB Governing Council member Yves Mersch and ECB Vice President Luis de Guindos spoke on Wednesday. Mersch gave the go-ahead for an expansion of the PEPP and TLTROs in December, as virtually all other ECB members have done so far, while de Guindos noted that stimulus options are being calibrated in light of the recent price rally. of crude oil and the recent good news about Covid-19 vaccines.

Both are aggressive developments when it comes to the ECB, and De Guindos’ comments on Wednesday should serve as a warning to markets that the ECB might not be as inclined to deliver too much on the stimulus front in December as they did. we might be back in late October.

EUR / USD battle to close above monthly high

EUR / USD is currently fighting a battle to close above the previous monthly high at 1.1919. If it can, it would be a bullish sign that a move towards the August highs above 1.1950, and even up to 1.2000 could be next. Failure to do so sends the signal that perhaps a retest of 1.1800 to 1.1800 is more likely in the near future.

Eight hour chart