EUR/USD reaches new daily high, then retraced towards 1.1700, after FOMC minutes

EUR/USD remains steady, once FOMC minutes were released. Previously in the session, the pair traded in between the 1.1730/1.1691 range. Once the minutes were unveiled. the EUR/USD posted a new high at 1.1742 followed afterward by a fall to levels before the release at 1.1711 for a 0.02% gain.

In regards to the FOMC minutes, the Federal Reserve showed us that they are in no rush of bond tapering.

Concerning inflation, they made comments that supply chain bottlenecks and inflationary pressures remain “transitory”. In respect to the average inflation target, some officials noted that some measures are close to or above the FOMC 2% target.

Something to notice is that “several participants” are concerned about the medium-term inflation outlook, specifically “the possibility of the re-emergence of significant downward pressure on inflation."

On bond tapering, few officials noted that a possible adjustment of slowing the pace of bond purchases, however, could not be soon. This gives us clues that bond tapering talks are happening however the majority of the officials are in no rush, to start reducing purchases.

The substantial further progress in both goals has not been achieved, however, there were some specific remarks about failing to reach Fed’s goal in employment:: "Several participants emphasized that employment remained well below its pre-pandemic level and that a robust labor market."

On the other hand, the minutes outline the importance of ensuring that there should be no link between tapering and the timing of rate rises:

''Many participants noted that, when a reduction in the pace of asset purchases became appropriate, it would be important that the Committee clearly reaffirm the absence of any mechanical link between the timing of tapering and that of an eventual increase in the target range for the federal funds rate,'' the minutes stated.

We will have to wait for the Jackson Hole event, for more clues in regards to a change in the Fed’s monetary policy. What is clear, they don’t need to taper as soon as expected.