FOMC Minutes Boost The US Dollar

The US Federal Reserve unveiled the Minutes of its latest meeting, which reminded market players of the aggressive stance of the central bank. Policymakers are determined to move the monetary policy to neutral “expeditiously.” Additionally, the statement reads: “participants also noted that depending on economic and financial developments, a move to a tighter policy stance could be warranted.”

The EUR/USD pair trades below 1.0900, while GBP/USD hovers around 1.3070. Commodity-linked currencies are under strong selling pressure, with AUD/USD changing hands at 0.7510 and USD/CAD trading at 1.2530.

Crude oil prices were sharply down, undermined by the soft tone of Wall Street, now at around $97.00 a barrel. Global indexes closed in the red, with US ones further weighed by FOMC Meeting Minutes.

Gold price held within familiar levels, now trading at around $1,924 a troy ounce. The EUR/USD pair trades near its weekly low at 1.0873 following the release of the FOMC Meeting Minutes on Wednesday. The document reminds traders and market participants that the US Federal Reserve is determined to move the monetary policy to neutral “expeditiously.”

The Minutes reads: “participants also noted that depending on economic and financial developments, a move to a tighter policy stance could be warranted.” European leaders, on the other hand, were unable to reach an agreement on banning Russian coal, although they said it was due to a technical issue and that they would discuss it again on Thursday. Meanwhile, European Commission President Ursula von der Leyen said that new sanctions against the Kremlin would not be the last. The US is also expected to announce new measures against Moscow.

European and Asian indexes closed in the red territory, with Wall Street following the lead and extending its weekly decline. At the same time, government bond yields advanced, with the 10-year US Treasury note yielding as much as 2.66%, a fresh multi-year high.

On the data front, Germany published February Factory Orders, which dropped 2.2% MoM, while the EU Producer Price Index in the same month printed at 31.4% YoY, up from 30.6% in the previous month. On Thursday, Germany will release February Industrial Production, while the EU will unveil Retail Sales for the same month. In the US, the focus will be on weekly unemployment claims and Fed speakers.

The daily chart for the EUR/USD pair shows that it posted a lower low and a lower high, in line with the dominant bearish trend. Technical indicators in the mentioned time frame maintain their bearish slopes within neutral levels, while the pair develops below bearish moving averages, also supporting a downward continuation.

In the near term, and according to the 4-hour chart, the risk is also skewed to the downside. A firmly bearish 20 SMA has crossed below the longer ones and currently converges with a Fibonacci resistance level at 1.0965. At the same time, technical indicators remain in negative territory, the Momentum flat but the RSI resuming its decline, hinting at a bearish extension towards the YTD low at 1.0805.

The American dollar retained its strength on Wednesday, as the focus remained on geopolitical tensions and aggressive central banks that tend to adopt quantitative tightening sooner than expected. Geopolitically, earlier in the day, US President Joe Biden announced an executive order which will ban new investments in Russia.

On the other hand, European leaders were unable to reach an agreement on banning Russian coal, although they said it was due to a technical issue and that they will discuss it again on Thursday. Meanwhile, European Commission President Ursula von der Leyen said that new sanctions against the Kremlin would not be the last.