EURUSD and GBPUSD: What to look for in the Fed minutes. Rumors didn't help resume the pound's growth

Given the absence of important fundamental statistics today in the morning, all the attention of traders is focused on the situation around Brexit, as well as on today's minutes of the US Federal Reserve.



The British pound, which collapsed yesterday against the US dollar after news that the EU will not make concessions to Britain on the Northern Ireland border, has sharply increased today. However, the growth was short-lived, as it was based only on rumors that the EU could still make such concessions. In the morning, a note was made in the Times of London that the EU could agree to allow a double majority in the Northern Ireland assembly. However, Downing Street immediately denied these rumors, saying that London would not accept an additional agreement concerning only Northern Ireland, which quickly returned the pound to its place, making it possible for new players to enter short positions from fairly large levels of resistance.

Yesterday in Brussels, they expressed the opinion that, most likely, the British government would turn to the EU for extending the Brexit term until the summer of next year, making a direct hint that the EU would not object to this. However, Prime Minister Boris Johnson has so far adhered to his previous strategy, saying that England will withdraw from the EU on October 31 this year, with or without an agreement.

From a technical point of view, in addition to updating the level 1.2285, nothing has changed. An unsuccessful return to the resistance of 1.2240 may lead to further sales and the resumption of the bearish trend with the test of the next monthly lows in the areas of 1.2170 and 1.2110.



In the afternoon, attention will be focused on the publication of the minutes of the September meeting of the US Federal Reserve.

It is no secret to anyone that the Fed can lower interest rates by another 25 points in December this year, as well as announce the launch of a new program of quantitative easing, as committee chairman Jerome Powell indirectly hinted yesterday. Therefore, attention today must be focused on the distribution of votes within the committee, as the text of the minutes should provide more detailed information on the discussion of the decision to lower the key interest rate to 1.75%.

Also, attention will be drawn to the forecast for inflation in 2019, 2020 and 2021 from Fed economists. If they are revised downward, this will be another signal in the direction of easing monetary policy.

A significant moment is a "split in the ranks of the Fed." If there are more people who oppose further interest rate cuts in the future, the less pressure will be created on the US dollar.

As for the technical picture of the EURUSD pair, buyers of risky assets showed activity in the first half of the day, but failure to update Tuesday's high may create serious problems for further growth. Returning 1.0970 under intermediate support will return the market to a bearish mood, which will push the trading instrument to the lows of 1.0940 and 1.0905. It will be possible to talk about the resumption of the bull market only after a breakthrough of resistance in the 1.1000 area, which will lead to larger local highs in the areas of 1.1040 and 1.1070.

The material has been provided by InstaForex Company -