When are the FOMC minutes and how could they affect EUR/USD?

Today at 19:00 GMT, the Federal Reserve will release the minutes of the latest meeting of the Federal Open Market Committee (FOMC) that took place back on Jan. 31 - Feb. 1. At that meeting, officials voted unanimously to leave the target range for the fed funds (benchmark interest rate) unchanged at 0.5% - 0.75%. The next meeting will be Mar 14 - Mar 15. 

About the Fed and the USD

The US dollar has been rising in the market and according to some analysts, it could continue to do, supported by the divergence in monetary policy. The Fed bias to tighten diverges, from example, of the current expansionary stance of the European Central Bank. The key in the minutes, will be the clues about when the Fed will raise rates again. March and June are the most likely scenarios. The greenback could rise in the market if there are strong signals in the minutes of a March rate hike and/or a scenario of a stronger tightening cycle. On the opposite, a dovish message, could hurt the US dollar. 

How could affect EUR/USD?

The euro has been weak in the market since the beginning of February, affected by political uncertainty in Europe. The US dollar recovered strength during that period supported by better-than-expected US economic data that increased expectations of rate hikes form the Fed. 

EUR/USD reached earlier today the lowest level in a month at 1.0492 and then rebounded. Hawkish minutes could push the pair back under 1.0500. A close below that handle could target the December trading range between 1.0350 and 1.0500. On the upside, a message taken as dovish by market participants, could weaken the demand for the US dollar, favoring a bullish correction. A recovery below 1.0660 could be considered a correction, but if the euro rises above 1.0660 (20-day moving average),  it could remove the bearish pressure. 

Key Notes

FOMC minutes in the limelight - Nomura

The minutes could show the debate of the future path of monetary policy and also how officials analyze economic conditions, including key indicators like GDP and inflation. “If FOMC participants have become confident that these transitory factors have sufficiently diminished and goods prices will likely continue to increase, this confidence could have some implications for the future path of monetary policy,” said analysts at Nomura. 

About the FOMC minutes minutes

FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.