Will The FOMC Minutes Boost The Dollar Trade?

 | Nov 23, 2016 06:31AM ET

The U.S. dollar traded slightly higher versus most of its major peers Tuesday while the performance of the EUR/USD was mixed with the euro fluctuating sideways between 1.0660 and 1.0580. The pound sterling however, dropped back below 1.2430 and we will now wait for a renewed break either below 1.2340/1.23 or above 1.2515.

While the rise of the dollar may experience a slowdown in the near-term, the greenback should generally continue to benefit from mounting expectations for inflation and higher interest rates. The odds of a Federal Reserve rate hike in December have reached 100 percent and traders will be looking for further hints about the Fed's future monetary policy path when the FOMC minutes from the Fed's November meeting are released today at 19:00 UTC. We might see some volatile swings ahead of the Fed minutes but giving the upcoming Thanksgiving holiday in the U.S. on Thursday traders should not expect huge market moves.

Apart from the minutes U.S. Durable Goods Orders are scheduled for release at 13:30 UTC, a report which could have a positive impact on the USD. U.S. New Home Sales due at 15:00 UTC may be of minor importance.

Let's have a look at the technical picture:

EUR/USD
Recently the euro traded sideways between 1.0660 and 1.0580 accompanied by a slight upward tilt. Based on this formation we expect potential gains to be limited until 1.0665 while dollar bulls will need to break the 1.0580-support significantly in order to breathe new life into the dollar rally. If dollar bulls succeed, the euro could tumble towards 1.0520 and 1.0470. A break above 1.0670 however, could drive the euro higher towards 1.0715 and 1.0750.