July 8th, FOMC Protocols Didn't Clarify Market Situation

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(Edited)

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On Wednesday, July 7, at the end of the day, the euro fell by 0.28% to 1.1790. Prior to the publication of the minutes of the FOMC meeting on monetary policy from June 15-16, the euro rate fell to 1.1781. After the release of the protocol, the euro strengthened to 1.1821. There were no surprises under the protocol. The FOMC has shown that it is not worried about inflationary pressures, and thus reassured the markets. Some members considered the likelihood of earlier than previously thought that the conditions would be reached in order to be able to carry out the reduction in asset purchases. It is planned to start reducing purchases of mortgage bonds. You can read the protocol itself on the US Federal Reserve website.

Given that the US dollar index did not fall, it means that investors do not want to believe the regulator regarding the rate hike. The topic of rates remains dominant for Q3.

Scheduled statistics (GMT +3):

  • At 14:30 in the eurozone will be released the ECB report from the meeting on monetary policy for June.
  • At 15:15, Canada will announce a change in the number of new foundations for June.
  • At 15:30 the US will announce a change in the number of initial applications for unemployment benefits
  • At 17:30 - on the change in oil reserves according to the Ministry of Energy.
  • At 21:00 the US will report on the change in the volume of consumer lending in May.

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Current situation:

At the time of this writing, the euro is worth 1.1796. When the price bounced, it stopped at the trend line from the top of 1.1895. At the start of the European session, the major currencies are showing mixed performance. The yen, franc and euro are strengthening. The largest losses are incurred by the New Zealander (-0.65%), the Canadian (-0.55%) and the Australian (-0.55%). They immediately show that there is no risk appetite in the market.

The dollar index has stabilized at 92.65. On the daily timeframe, it is under the trend line. Investors are waiting for any economic statistics in order to understand whether it will rebound from it or pass and go higher to the level of 93.85.

The dollar index is at the resistance, then the EUR/USD pair is at the support (L1.1603 from 11/04/21 and L1.1704 from 02/31/21). If buyers fail to defend the level of 1.1780, then sellers will move south to the level of 1.1625 (the lower border of the descending local channel on the daily TF). The euro crosses remain on the buyer's side, with the exception of the yen and franc. They are in the top in terms of growth, so they are bought for euros.

Summary: on Wednesday, the euro closed with a decline, while it suffered the main losses before the release of the FOMC protocol. The protocol did not clarify the market situation. One group of investors believes that the Fed will start raising rates earlier, while others believe the regulator and believe that the rate will not rise for a long time.

The EUR/USD pair is at the support of 1.1780 (L1.1603 from 04.11.21 and L1.1704 from 31.02.21). If buyers fail to protect it, sellers will move south towards the 1.1625 level. Almost all euro crosses are in league with buyers. Recovery and closing of the day in the 1.1835 (45 gr.) Area will favorably affect the decision of buyers who are now out of the market.

Posted Using LeoFinance Beta



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