EUR/USD analysis: FOMC Minutes add fuel to the fire

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1772

The common currency started the day with a bad footing, undermined by news indicating that ECB's President Draghi, won't make any monetary policy announcement in the US Jackson Hole Symposium that will take place next week, but rather keep any new discussion on the matter until the fall. The pair fell down to a fresh 3-week low of 1.1681 in the US afternoon, even despite disappointing US data. In July, Housing starts declined 4.8% to a seasonally adjusted annual rate of 1.16 million units while Building permits plunged 4.1%, to a rate of 1.22 million units.

In the US afternoon, however, the picture changed as President Trump sent the greenback lower ahead of the release of FOMC Minutes, after announcing the end of the Manufacturing Council and Strategy and Policy Forum, a group of independent top business leaders meant to advise the president. The group claimed they quit after the tepid response of the president to the weekend's event were a woman died and 19 were injured by a white nationalist. Trump, on the other hand, claimed that he ended it by twitter. As for the FOMC Minutes, they added fueled to the fire, sending the pair further up as policymakers are clearly concerned about softening inflation, with many seeing inflation below 2% by longer than expected. Also, the Minutes said that the balance sheet will be reduced in an upcoming meeting, with no further detail, but many expected that to only modestly tightening policy.

The pair surged beyond 1.1770 as an immediate reaction, pressuring its 20 and 100 SMAs in the 4 hours chart, now converging around the level, while technical indicators bounced sharply from oversold levels, now nearing their mid-lines. The fact that odds for a rate hike in the US keep shrinking, favors additional gains ahead, with the pair now needing to break above the 1.1820 region to gather upward momentum during the upcoming sessions.

Support levels: 1.1770 1.1735 1.1690

Resistance levels: 1.1820 1.1860 1.1910

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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