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MTrading Team • 2024-02-21

EURUSD bulls take a breather ahead of key data/events

EURUSD bulls take a breather ahead of key data/events

Financial markets across the board remain dicey early Wednesday as traders await the key Federal Open Market Committee (FOMC) Minutes for the January meeting. The pre-event anxiety joins geopolitical woes and US government shutdown fears to challenge the optimists. However, the US Dollar fails to cheer the sour sentiment, as well as the increasing odds of the delayed Fed rate cuts, as traders prepare for the likely rebound in the Greenback.

With this, the US Dollar Index (DXY) seesaws around the lowest level in two weeks while EURUSD and GBPUSD edge higher. That said, Antipodeans like AUDUSD, NZDUSD and USDCAD print mild gains as commodities defend the latest run-up. It should be noted that the Gold price rose for the fifth consecutive day whereas crude oil pared the previous day’s heavy losses.

Wall Street closed in the red but the Asia-Pacific equities remained slightly firmer led by China. Further, US Treasury bond yields pare recent downside but the cryptocurrencies print losses near the multi-month highs marked the last week.

Following are the latest moves of the key assets:

  • Brent oil prints mild gains around $83.00 to pare the biggest daily loss in a week.
  • Gold price rises for the fifth consecutive day to around $2,030 at the latest.
  • USD Index stays depressed at two-week low, dicey around 104.00 as we write.
  • Wall Street closed in the red but Asia-Pacific stocks edged higher. Further, the shares in Europe and the UK trade mixed during the initial hour.
  • BTCUSD and ETHUSD both pare the last week’s gains with losses around $51,500 and $2,940 respectively by the press time.
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US Dollar braces for hawkish Fed Minutes

Traders are on the lookout for hawkish Fed clues amid hopes of witnessing a delay in the widely awaited rate cuts, from March to May and then recently to June. The US Dollar, however, fails to cheer the sentiment amid dicey yields and looming fears of the US government shutdown if the new deal isn’t agreed before March.

In addition to the hawkish Fed concerns, the geopolitical fears emanating from likely US sanctions on Russia and the Middle East tensions also raise doubts about the US Dollar’s latest fall.

Even so, the pre-event anxiety put a floor under the US Dollar ahead of today’s FOMC Minutes.

Apart from the market’s anxiety ahead of the FOMC Minutes, a softer Eurozone wage growth also challenges the EURUSD bulls. That said, the bloc’s wages grew 4.5% QoQ during Q4 2023 versus 4.7% prior.

On a different page, comments suggesting the Bank of England’s (BoE) rate cuts from the British central bank officials in their latest testimonies challenge the GBPUSD bulls. Furthermore, USDCAD bears also hesitate as Canadian PM Justin Trudeau signaled conviction in the Bank of Canada’s (BoC) rate cuts, especially after softer Canada inflation data.

Gold prices, however, gained the bull’s favorite status amid hopes of witnessing softer rates in near future, as well as the central bank buying. Further, crude oil also remains slightly firmer after falling the most in more than a week.

  • Strong buy: USDCAD, USDJPY
  • Strong sell: Crude Oil, US Dollar, GBPUSD
  • Buy: BTCUSD, ETHUSD, Nasdaq, Gold

Fed Minutes are the key…

Moving on, a slew of central bankers from the US, the UK and the Eurozone will entertain intraday traders early Wednesday. However, major attention will be given to the policymakers’ bias toward the Fed rate cuts. That said, traders are almost certain that the policymakers discussed pushing back the first rate cut in months from the market-favorite March to June. Should the FOMC Minutes match the market forecasts, the odds of witnessing the US Dollar strength can’t be ruled out. More importantly, any surprise dovish outcome won’t hesitate to confirm a short-term downward trajectory for the Greenback.

May the trading luck be with you!