The FOMC Meeting Minutes have revealed the dovishness among the policymakers. Despite the fact, that FED seems content to hike rates again in June, the minutes reflected more uncertainty over the trajectory for rates. The main reason for this change in the mood is uncertain inflation outlook. Some policymakers are becoming concerned that the unemployment rate is running below the full-employment level which could pose upside risks to inflation. Other policy members, in contrast, keep seeing the downside risks to the inflation outlook, particularly given the low inflation print and still-low measures of inflation expectations. Moreover, their other concern is the possible labour market tightening without giving rise to inflationary pressures. This is why this sentence from the minutes: "prudent to await additional evidence indicating that the recent slowing in the pace of economic activity had been transitory" was the key clue regarding a further wait-and-see approach made by FED policymakers and the main reason of the lack of the hawkish tone in the minutes. In conclusion, the June rate hike is still possible, but further rate hikes are now slightly less possible as the FED will await further economic data to justify the hike later this year.
Let's now take a look at the US Dollar technical picture on the H4 time frame. Since the FED interest rate hike in March, the US Dollar index keeps making lower highs and lower lows. Moreover, any attempt to rally is quickly faded by the bears, so the price is now quite close to the very important support at the level of 95.91. This was the level from the US Dollar surged after the presidential election campaign was won by Donald Trump. The index is trading below all of the moving averages and the momentum indicator is pointing to the downside. The next immediate support is seen at the level of 96.80 and the next immediate resistance is seen at the level of 97.48.
