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

The FOMC minutes, of the 18-19 June meeting, will be released on Wednesday at 18:00 GMT. At that meeting, the Federal Reserve kept the Fed Funds rate target unchanged at 2.25% to 2.50% as expected. St. Louis Fed President James Bullard argued at that meeting that rates should be cut and dissented with the decision. 

Key notes

At the last meeting, the Fed kept rates unchanged as widely expected. Back then, expectations for a rate cut later were on the rise. In the statement, the FOMC dropped the reference to “patient” in its statement, signaling it was ready to ease monetary policy if needed. 

The room for surprises is small considering that Fed’s Chair Powell spoke today for several hours at Capitol Hill. He hinted at a potential rate cut later at the next meeting (July 30-31) on the back of trade tensions and worries over the weakness of the global economic outlook. His comments triggered a decline of the US Dollar as it reinforced rate cut expectations. 

The minutes will show the discussion and could revel the readiness of the central bank to lower interest rate. “We look for discussions regarding the risks to the economic expansion (crosscurrents) and a characterization of the inflation outlook given the revisions to the downside for those projections. We also expect the minutes to expand on the decision adopted by some Fed officials to lower their long-run rate projections,” said TDS analysts. 

Implications for EUR/USD

Before the minutes, the EUR/USD pair is trading above 1.1250 after bouncing from the lowest level in almost three weeks. The short-term tone changed to the upside after Powell’s prepared statement. It bottomed yesterday at 1.1190, the lowest since June 19, when the FOMC meeting took place. 

With little room for surprises, a more dovish-than-expected minutes that could boost EUR/USD further would need to open expectations for larger rate cuts, to a more aggressive stimulus policy. In such a scenario, a daily close above 1.1285 (20-day moving average) would add argument for a bullish case and a recovery back above 1.1300. The next key resistance is seen at 1.1345. 

On the flip side, the US Dollar could recover ground if the minutes, tamper rate cut expectation, but Powell’s words are still fresh so it would take something new to make significant changes to Fed’s policy expectations. Some “not so dovish” details could trigger some dollar bulls on profit-taking or “buy the rumor, sell the fact” situation. A slide below 1.1230 would expose 1.1200. Below that level attention would turn to 1.1180 (June low), a critical support that if broken would point to further losses. 

About the FOMC 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.