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Euro and pound trade cautiously as markets await Fed minutes
The Fed held rates steady in July and signaled future decisions will hinge on incoming data, while UK inflation is set to act as a near-term catalyst for sterling.
The euro and British pound are trading cautiously against the US dollar as traders look ahead to the release of minutes from the Federal Reserve’s latest meeting, according to Action Forex. The July meeting left interest rates unchanged and reiterated that future moves will depend on incoming economic data.
In the minutes, investors are focused on how FOMC members assessed inflation risks, labor-market conditions, and the interest-rate outlook. Action Forex said a more dovish tone could strengthen expectations for monetary easing and weigh on the dollar, while continued emphasis on inflation risks and a restrictive stance could support the US currency.
For sterling, the report points to UK inflation figures as an additional immediate driver. Persistent price pressures could limit the scope for further easing and support the pound, while a bigger slowdown in inflation could reinforce expectations for lower UK rates.
Action Forex also noted technical levels that may influence the next move in EUR/USD and GBP/USD, with EUR/USD recently testing June highs near 1.1600 and GBP/USD pushing above the 1.3500 resistance level. The outlet said a dovish Federal Reserve message could pressure the dollar further and support additional gains in both currency pairs, while a more restrictive reading could trigger the opposite.
Latest closeEUR/USD 1.157 ▲0.4%|GBP/USD 1.354 ▲0.3%