EUR/USD surges to fresh 13-month high following FOMC Minutes

On Wednesday, there was a sharp increase in the EUR/USD exchange rate, which culminated in fresh 13-month highs. Growing hopes that the Federal Reserve (Fed) would start a rate-cutting cycle in September are the main driver of this surge. These expectations were reinforced with the publication of the Fed meeting minutes, which caused the US dollar to significantly decline and the euro to rise in response.

The market was encouraged by the FOMC Meeting Minutes, which made a strong indication of a September rate cut. This view was further reinforced by officials debating when to lower interest rates—discussions that started in July. A 50 basis point drop at the September meeting is already priced in by roughly 40% of market participants, who have sharply raised their bets on a rate cut as a result. A rising sense of confidence that the Fed will loosen monetary policy in response to economic conditions is reflected in this sharp movement in expectations.

The Purchasing Managers Index (PMI) data from the US and EU is likely to be released on Thursday, which might impact market mood and offer more insights into the state of the economy. The US and EU PMIs are both expected to stay mostly unchanged, although any notable departures from forecasts could have an effect on the EUR/USD exchange rate. Investors also keep a tight eye on the annual Jackson Hole Symposium, especially Fed Chairman Jerome Powell’s speech, for hints regarding the Fed’s future course of monetary policy. The occasion is anticipated to garner a lot of attention and may influence the mood of the market in the upcoming days and weeks.

In August, the EUR/USD showed a robust rise, breaking past earlier resistance levels and hitting new highs. Technical data indicates that bullish momentum is still strong, implying that more gains are likely in the near future. The EUR/USD is likely to stay a key trading pair for investors as they process the implications of the Fed’s meeting minutes and look forward to the next round of economic data releases.