EUR/USD softer ahead of FOMC minutes

The EUR/USD pair drifted into the midrange on Wednesday. The pair is trading at 1.0812, up +0.05%, but is on the soft side as traders wait for the minutes of the latest Fed’s policy meeting. It is unlikely that the Fed will deliver anything new for traders to chew on though.

European and US Purchasing Managers Indices (PMIs) are slated for Thursday, where markets expect a slight improvement in the euro area and a softer print in US activity figures.

Friday wraps up the week with a smattering of speeches from policymakers from the European Central Bank (ECB). The Fed’s latest Monetary Policy Report also drops on Friday.

The Fed’s Minutes from its last meeting will be poured over by investors looking for hints about how close the Fed is to cutting rates. The Fed still sees around three rate cuts this year, while money markets are still hoping for at least five, according to the CME’s FedWatch Tool. Markets are pricing in 70% odds of a first rate trim in June.

The EU’s Consumer Confidence in February improved more than expected, printing at -15.5 versus the forecast -15.6, compared to the previous month’s print of -16.1.

Thursday’s EU HCOB PMIs are broadly expected to recover, with the pan-euro area Composite PMI for February forecast to improve to 48.5 from 47.9. A below-50.0 print for the Composite component would represent a ninth straight month in contraction territory.

Europe’s final Core Harmonized Index of Consumer Prices (HICP) inflation on Thursday is expected to confirm the preliminary print of 3.3% YoY.

The US is expected to see a slight downtick in its PMI figures, with the Services component forecast to drop to 52.0 from 52.5 and the Manufacturing component expected to drop to 50.5 from 50.7.

EUR/USD remains on the bullish side of the 200-hour Simple Moving Average (SMA) near 1.0767 as the pair drifts into the high end in the near term. Price action has continued to extend a rough recovery from last week’s dip into the 1.0700 handle, but halting momentum sees bullish sentiment beginning to thin at the intraday level.


Daily candlesticks have the pair knocking into the 200-day SMA near 1.0830, and topside momentum is facing a significant technical ceiling. The EUR/USD is still facing a pattern of descending highs, and the pair is still down around 3% from December’s peak bids near 1.1140.