The Federal Open Market Committee (FOMC) minutes, of the April 29th meeting, will be released on Wednesday at 18:00 GMT. At the mentioned meeting, the Federal Reserve (Fed) kept the Fed Funds rate unchanged at 0.00-0.25% as expected.
The minutes follow a presentation on Tuesday from Chair Powell and also many officials had spoken on public since the meeting. So the room for new developments is small. Market participants will probably look for mentions about negative rates and also about the yield curve and the purchase program.
“Discussions in the edited minutes may seem somewhat out of date as the national conversation in the almost three weeks since the meeting has rapidly moved from the revelations of the economic debacle to the apparent success of several states in reopening parts of their economies and considerations about the criteria for opening the others”, argues Joseph Trevisani, Senior Analyst at FXStreet.
Analysts at TD Securities consider the minutes will be closely scrutinized for signs of an upcoming change in the forward guidance. They see the Fed adopting a combination of a Yield Control Curve (YCC) and Average Inflation Targeting (AIT) later this year.
Implications for EUR/USD
The minutes are not expected to be a game-changer. The meeting itself was mostly ignored and on Tuesday, Chair Powell presented testimony to a Senate committee, so there is not much left to say. Only surprises or some consideration that the market has not priced in, could impact on the currency market.
Many crosses versus the US dollar are on the edge of breaking relevant technical levels. In the case of EUR/USD, it is testing the 1.0990/1.1000 area. A break higher should clear the way to an extension of the recovery and it would be the end of a 7-week range around 1.0900.
The greenback arrives to the minutes under pressure and they could give the excuse to extend losses. A dovish tone could trigger the slide, it would require some kind of talk about negative rates for example.
On the flip side, if the US dollar recovers momentum, it could have space for a considerable retracement. EUR/USD would pull back into the range, probably to the intermediate zone at 1.0900 and below to the 20-day moving average, now at 1.0850. The critical support remains the 1.0750/60 area.
About the FOMC minutes
FOMC stands for Federal Open Market Committee. It organizes eight meetings per year where it 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.
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