The EURUSD pair slipped 0.28% to 1.1790 on Wednesday, July 7. Prior to the release of minutes from the FOMC’s June 15-16 monetary policy meeting, the euro rate slid to 1.1781. After the release, the euro strengthened to 1.1821. The minutes brought no surprises. The regulator made it abundantly clear that inflationary pressures are not a concern, thus reassuring the markets. Some members considered the likelihood that the conditions for dialing back asset purchases would be met earlier than previously thought. The plan is to start curbing the purchase of mortgage-backed securities. The minutes are posted on the Federal Reserve’s website.
Given that the US dollar index did not decline, this means investors are not inclined to believe the regulator’s narrative regarding interest rates. The rates hike issue remains in the spotlight in Q3.
Today’s macro agenda (GMT 3)
- 14:30 Eurozone: ECB monetary policy meeting (June)
- 15:15 Canada: housing starts (June)
- 15:30 US: initial jobless claims, 17:30: EIA weekly petroleum status report
- 21:00 US: consumer credit change (May)
Current outlook
At the time of writing, the euro was trading at 1.1796. When the price bounced, it stopped at the trendline from the top of 1.1895. Since the opening of the European session, major currencies have been showing mixed performance. The yen, franc and euro are strengthening. The steepest losses are seen in the New Zealand (-0.65%), Canadian (-0.55%) and Australian (-0.55%) dollars. These currencies immediately show that there is no risk appetite in the market.
The DXY has stabilized at 92.65. On the daily timeframe, it is beneath the trendline. Investors are waiting for any macro data to figure out whether the index will bounce off that mark or move higher to 93.85.
The dollar index has run against resistance, so the EURUSD pair is meeting support (L1.1603 from April 11 and L1.1704 from February 31). If the bulls fail to defend the 1.1780 level, the bears will make a push down to 1.1625 (the lower bound of the descending local channel on the daily TF). Euro crosses are on the buy side, with the exception of the yen and the franc. These currencies top the leaderboard, so they are being bought for euros.