EUR/USD retreats and drops back below 1.1300

EUR/USD peaked at 1.1314 after the FOMC minutes but then it pulled back and near the end of the American session it was trading at 1.1280/85, less than 10 pips above yesterday’s closing price. For the second day in a row, the pair is posting gains but also being unable to hold above 1.1300.

The minutes from the latest meeting of the Federal Reserve provided evidence of a division among officials about the timing of the next rate hike. “Members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity”, while “a couple of members preferred” to wait for more evidence that the CPI would rise to a 2% on a sustained basis and “some other members” anticipated that economic conditions would soon warrant a hike.

Greenback weakened in the market after the minutes, for the decline was modest and the US dollar was able to hold above yesterday’s lows.

EUR/USD technical outlook

“The EUR/USD pair surged up to 1.1315, holding around the 1.1300 region at the end of the day, after briefly falling down to 1.1239 post-release. Accelerating its advance, the 4 hours chart shows that the technical indicators turned higher within overbought territory, whilst the 20 SMA maintains a sharp bullish slope well below the current level”, said Valeria Bednarik, Chief Analyst at FXStreet.

According to her, risks in the pair remain to the upside “with a break beyond 1.1325 required to confirm additional gains up to 1.1400 this Thursday.”