The dollar has stabilized after a massive sell-off fuelled by recent Trump’s attack on the Fed policy and comments by the central bank official Kaplan who hinted at a pause in tightening. The greenback demand is reemerging gradually ahead of the FOMC meeting minutes release due later today.
As such, EURUSD retreats marginally from highs in the 1.16 region, with the 20-DMA at 1.1535 is back on traders’ radars. Market participants expect a hawkish tone from the Fed minutes despite the recent Trump’s criticism as the central bank itself is an independent institution, and the economic fundamentals remain solid and justify further rates hiking.
So if the Fed doesn’t disappoint the dollar bulls, EURUSD could accelerate the emerging downside correction and challenge the 1.15 support. The stakes are also getting higher for a delivery from Powell at Jackson Hole due on Friday. The expectations of this event could also support the greenback in coming days.
By Helen Rush
Senior Analyst at Capital Markets