FOMC Minutes Steer EURUSD Focus to Fed Rate-Cut Timing as ECB Backs Another 25-Basis-Point Hike
Updated
Updated · XTB · Jul 8
FOMC Minutes Steer EURUSD Focus to Fed Rate-Cut Timing as ECB Backs Another 25-Basis-Point Hike
3 articles · Updated · XTB · Jul 8
Summary
Wednesday’s FOMC minutes are the day’s main catalyst for EURUSD, with traders looking less at further Fed tightening than at when a US rate-cut cycle could begin.
Kevin Warsh’s first Fed communications are under scrutiny because any hint of easing too soon could weaken the dollar and risk signaling premature victory over inflation.
The ECB is supporting the euro after its June 25-basis-point hike, as markets increasingly price another increase later this year amid sticky services inflation.
US-Iran tensions and higher Brent and WTI prices are adding a fresh inflation risk premium, complicating policy on both sides of the Atlantic and boosting dollar safe-haven demand.
US bond yields remain the key transmission channel: higher yields would likely support the dollar, while lower yields could revive pressure on the US currency.