US Dollar Jump on FOMC Faded, EUR/USD Recovers

• USD Pop on FOMC Pared

• EUR Reclaims 1.22 With Focus on PMI

Recap: The main comment that had grabbed the markets attention in the FOMC minutes was that “A number of participants suggested if the economy continued to make rapid progress toward the Committee's goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases”. However, while this hints at the “T” word (taper), this is not entirely new, given that the comment has come from the small hawkish contingent on the committee and not the core. Keep in mind, since the minutes, NFP was notably soft, while higher than expected inflation data had been quickly talked down by Fed members. As such, in response to the FOMC minutes, the USD saw a slight bid to reclaim the 90 handle, while US yields picked up, however, the move has been largely retraced given the fact that the minutes are somewhat light on substance, providing little in the way of new information.

EUR/USD: Following the FOMC minutes the Euro had stood its grounds, holding onto support at 1.2170-80 to make another test of the 1.22 handle. Given the relatively light economic calendar, focus will be on the upcoming PMI releases tomorrow, which are expected to highlight an improvement in the Euro Area and thus underpin the currency. Thus far, the backdrop remains supportive for EUR/USD to challenge 1.2245-50 again.

EUR/USD CHART: HOURLY TIME FRAME

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