Today, the Federal Reserve will release the minutes of the July 30-31 Federal Open Market committee meeting. As a reminder, the central bank cut the fed funds rate 0.25% in July for the first time since December 2008. Traders expect the Fed to cut the rate by another quarter percent next month and will be thoroughly assessing the message from the minutes in this context.
The dollar holds steady ahead of this event, also focusing on the upcoming Powell’s testimony at a Jackson Hole symposium. By the way, the governor’s comments could overshadow the effect from the FOMC minutes. Anyway, these two events will bring more volatility into dollar pairs. Should the Fed’s tone come as more neutral and not as dovish as expected, the greenback could stage a rally across the board.
In the EURUSD pair, there is a possibility of challenging fresh lows in this scenario. The common currency could challenge the 1.1060 local support and then target the lows around 1.1025 on the way to 1.10. The additional risk event for the euro is the Eurozone PMI data due on Thursday. Should the numbers disappoint, the possibility of announcing a massive package of stimulus measures by the ECB in September will rise.