EUR/USD steadies below 1.16 as markets wait for FOMC minutes

US Dollar Index stays in a tight range above 95.
The political crisis in the U.S. stays in the crosshairs.
Markets wait for the FOMC to release the August meeting minutes.

Eren Sengezer FXStreet

The EUR/USD pair rose above the 1.16 mark for the first time in two weeks after the USD weakened on the latest political developments in the U.S. However, the pair struggled to push higher as investors moved to the sidelines while waiting for the FOMC to publish the minutes of its August meeting.

Earlier today, reports of US President Donald Trump's former lawyer, Michael Cohen, pleading guilty to breaking federal election laws with an intent to influence the outcome of the 2016 presidential election triggered a broad-based USD sell-off. Moreover, Cohen's lawyer told the media that he had information regarding the Russian conspiracy. Responding to these developments, Donald Trump said "Michael Cohen plead guilty to two counts of campaign finance violations that are not a crime. President Obama had a big campaign finance violation, and it was easily settled!" via Twitter.

Today's data from the U.S. showed that existing home sales declined by 0.7% in July after contracting by 0.6% in June and missed the market expectation of a 0.6% growth by a wide margin. Despite the dismal data, the US Dollar Index recovered from three-week lows that it set below the 95 mark earlier today and was last seen at 95.17, down 0.04% on the day.

“Given that it was a meeting with almost nothing material to come from it, the minutes are unlikely to throw up much of interest, although our US economists noted that this could present the opportunity for the Fed to discuss longer-term issues, potentially including discussion around the balance sheet and the implementation of monetary policy (e.g. floor v corridor system), especially given the speech from NY Fed Markets Group chief Simon Potter immediately following the FOMC meeting earlier this month,” Deutsche Bank analysts wrote in a recently published report.

When are the FOMC minutes and how could they affect DXY?

Technical levels to consider

A daily close above 1.1600 (psychological level) could open the door for further gains toward 1.1690 (100-DMA) and 1.1790 (Jul. 9 high). On the downside, supports could be seen at 1.1550 (daily low), 1.1500 (psychological level/20-DMA) and 1.1395 (Aug. 20 low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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