Fed Minutes Reveal a Division
Minutes from the July FOMC meeting released on Wednesday showed a division among members. While the Fed cut rates last month, the minutes revealed that some members had wanted to take a more aggressive approach by cutting 50 basis points. The statement that followed the meeting had shown that two members voted against the cut, wanting to keep rates unchanged.
Members were also not on the same page when it comes to inflation. Some viewed the recent pickup as confirmation that soft inflation is in the first quarter was transitory. Others argued that inflation has been persistently running below the target mandate and that action needed to be taken.
The market reaction was initially volatile, however, EUR/USD held within a range that has dominated the pair for a week. The futures markets slightly pared back expectations for further easing, although continue to nearly fully price in another cut in September.
Strong Data Underpins the Euro
PMI data has kept the single currency firmly bid in early trading on Thursday. Manufacturing and Services PMI figures out of France, Germany, and the Euro area all came in ahead of analyst expectations.
EUR/USD rallied toward the upper bound of its recent range on the back of the data releases before losing a bit of momentum.
EUR/USD is at an interesting support level as a horizontal level at 1.1074 marks the lowest daily close in 2019. At the same time, the US dollar index (DXY) is starting to pull back from a resistance level at 98.25.
The potential for a recovery seems to the rise the longer EUR/USD holds above this support level. I do think we need to see a break above 1.1118 to confirm that a recovery is taking place. This is a horizontal level that falls slightly above the range highs.
On the data front, the ECB will release monetary policy minutes later today. From the US, PMI figures are scheduled for release. Outside of data, the three-day Jackson Hole Symposium starts today.
- EUR/USD remains in a range but several risk events are coming up that could trigger a break.
- The pair will probably be sensitive to headline risk from the Jackson Hole Symposium
This article was originally posted on FX Empire
More From FXEMPIRE:
- USD/SGD Bullish Bounce from the Zone Should Target 1.3964
- EUR/USD Daily Forecast – Euro Contained Within 1-Week Range
- USD/CAD Daily Forecast – 2.5 Month Old Symmetrical Triangle in Play
- USD/JPY Forex Technical Analysis – August 22, 2019 Forecast
- Melting Hopes: What Emerged in The Fed’s Minutes
- Unloved Rally in US Equities