We finally managed to get some action in the EURUSD pair and the action has been carrying over to this morning as well. The focus of the markets yesterday was on the FOMC minutes and the euro had been building up nicely to the release of the minutes. Though we did not get any explosive action on release of the minutes, the euro bulls should be pretty much happy with the way that things have panned out since then.
EURUSD Moves Higher on Dovish FOMC
The euro had been steadily gaining in strength for the past few days as the NFP data disappointed the markets and made it reconsider its assumption that the Fed would indeed hike rates in December. With weak incoming data, it is always going to be difficult for the Fed to make that decision to hike and thats what the market also seems to think as well as we have seen the dollar weakening over the last few days and the pair breaking through 1.18 even before the release of the minutes.
The FOMC minutes was the next thing that the market was watching out for and there were no specific hints on when the next rate hike would be. This has been construed as being dovish by the market and the dollar has been selling off since the release of the minutes. The market was expecting some hawishness from the Fed is the form of specific hints that the December rate hike is still on but with the absence of any such signal, we are seeing the dollar sell off.
The EURUSD pair has now approached a very crucial resistance region between 1.1870 and 1.1920 and this is probably the last hope for the bears before the euro train gains more legs. We have the PPI and unemployment claims data from the US scheduled to be released later in the day and the dollar bulls would hope to see some strong data so that they get an opportunity to push the dollar up. It is likely to be another volatile day of trading.