EUR/USD Takes No Direction After Mixed FOMC Minutes

• EUR/USD bulls remain after FOMC Minutes.
• The Fed Minutes show that officials are divided on support for further hikes.

The pair EUR/USD moves on mixed ground after the Federal Open Market Committee Minutes were released, which show board members agreed inflation risks remain unacceptably high, but officials also broadly agreed the scope for further hikes it is less secure. EUR/USD was testing 1.0750 and daily lows, but has since rallied as high as 1.0760 on a fresh 15 minute candle.

FOMC minutes

• Some participants commented that additional monetary policy tightening would probably be warranted at future meetings.
• Some participants stressed that it was crucial to policy that the statement not signal the likelihood of rate cuts this year or rule out further hikes.
• The Fed staff continues to forecast a mild recession beginning later this year, followed by a moderate-paced recovery.
• Several participants argued that if the economy were performing according to their outlook, more firm monetary policy might not be necessary.
• In general, the participants agreed that the degree of desirability of further increases in interest rates was diminishing.
• Many participants focused on the need to maintain optionality after the May meeting.
• Participants considered that the tensions in the banking sector were likely to affect economic activity, but to an uncertain degree.
• Participants agreed that inflation was unacceptably high, and that it is declining more slowly than they expected.
• Some participants raised concerns that the federal debt limit might not be raised on time, which would threaten significant disruption to the financial system and a tightening of financial conditions.

Overall, the Fed minutes show that officials are split on support for further hikes. As such, the market is directionless.

EUR/USD Technical Analysis

EUR/USD is under pressure in general, but the FOMC minutes have not given bears much conviction and so until price can break through 1.0720 convincingly, bulls might take heart. However, the bulls will have to overcome a series of resistances and reach the 1.08 zone, according to the 4-hour chart analysis: