EUR/USD rises back above 1.0600 as Fed officials eye no rate cuts in 2023
- EUR/USD dived to 1.0580s on the release of the US Federal Reserve minutes.
- FOMC: Officials do not expect to cut rates in 2023.
- FOMC: Policymakers did not express the size for further rate hikes.
EUR/USD holds to the 1.0600 figure after the Federal Reserve (Fed) unveiled December’s monetary policy minutes which showed that policymakers remain resolute in tackling inflation and do not expect rate cuts during 2023. Therefore, the EUR/USD dived to 1.0585 before rebounding to current exchange rates. At the time of typing, the EUR/USD is trading at around 1.0600.
Summary of the December FOMC minutes
The Federal Reserve’s December minutes showed that officials agreed to slow the pace of interest rate hikes but added that a slowdown is not a “weakening commitment to achieving price stability on that inflation is already on a persistent downward path.” They also added that the US central bank had made significant progress in moving to restrictive policies in 2022 and that “no one predicted that rate cuts would be necessary for 2023.”
The minutes flashed that inflation risks could be more persistent. Even though the Fed welcomed October and November drop in inflation, they do not indicate that inflation is on a “persistent downward path.”
EUR/USD Reaction to the headline
The EUR/USD 1-hour chart showed that the shared currency edged towards the daily pivot at around 1.0580 but quickly retraced the downward move and climbed towards the 20-hour Exponential Moving Average (EMA) at around 1.0598, surpassing it towards 1.0600. Oscillators like the Relative Strength Index (RSI) persisted in bullish territory, while the Rate of Change (RoC) showed that sellers were gathering momentum. Therefore, the EUR/USD might remain range-bound within the 1.0580/1.0620 range ahead of the Wall Street close.
