Dear Traders,
While the euro is clearly pointing downwards facing the 1.0620-area, the British pound showed its strength and climbed up to 1.5239 on a slight improvement in U.K. consumer prices. However, for sterling breakout-traders it was yet another day of loss making sideways moves. Perhaps we will see greater consistency in the cable's performance with the release of the FOMC meeting minutes today when the U.S. dollar may lead the way.
Which details to pay attention to in the FOMC minutes?
The Federal Reserve releases minutes from its October 27-28 meeting at 19:00 GMT. Since the Fed has been avoiding any date-based guidance, policy makers added a detail to their October statement, stating that the committee would consider whether it will be appropriate to raise rates at the December meeting. When this detail will be explained in the minutes, market participants may consider this as an increased likelihood for a liftoff next month. Apart from that, the focus will also be on the communication regarding the pace of rate increases following liftoff. While the Fed expressed concerns about global risks in its September statement, there was no sentence regarding inflationary pressure in the October statement. If the minutes confirm that Fed officials are optimistic about domestic data and less concerned about global risks, the USD could accelerate against its major peers.
However, the minutes may invigorate the dollar's strength in the short-term but with still one month to go before the highly anticipated FOMC December meeting, dollar gains could be limited. Traders shall therefore expect possible pullbacks in the dollar's trend.
EUR/USD
The euro is trading within a downward channel. For the time being we will focus on the channel's resistance and support lines. Above 1.0680 the euro may head for a test of 1.0725. Breaking above the channel, the next key resistance zone is seen at 1.0805-30. Whether the euro will be vulnerable for further losses could hinge on the minutes. A next bearish target could be at around 1.0520.
GBP/USD
Given the recent consolidation phase, breakouts are becoming more likely. With a significant break above 1.5240 we see chances of further bullish momentum with new targets at 1.53. Below 1.5130 we will favor a bearish bias, driving the pair towards 1.51 and further 1.5030.
We wish every trader a successful trading day.
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