EUR/USD erases gains after FOMC minutes

1. EUR/USD retreats further and trims most of the day’s gains.  
2. US dollar recovers ground across the board, as minutes appear “not so dovish”.  

The EUR/USD pair dropped further from the highest level in two weeks following the release of the minutes from the latest FOMC meeting. Earlier today, EUR/USD hit 1.1370, and it just fell to 1.1334, moving closer to daily lows. Now the pair is flat for the day, after finding resistance at the 20-day moving average and following US dollar strength on the back of Fed’s minutes.  

According to the document, several participants saw further rate hikes appropriate in 2019, and almost all thought it desirable to announce a plan to stop reducing Fed’s asset holdings later this year. FOMC members agreed that it was important to be flexible in managing the process of balance sheet normalization. Market participants appear to have interpreted the minutes as “not so dovish”, taking into account the US dollar appreciation that followed the document.  

Levels to watch  

The euro rose from last week lows more than a hundred pips. Still, the chart points to the upside, but the momentum eased on Wednesday.  Now EUR/USD is flat for the day, hovering around 1.1340. The upside was capped today by the 20-day moving average. A daily close above it (currently at 1.1360) would add support to further gains. While on the flip side, a slide back below 1.1310, could increase the bearish pressure.