EUR/USD consolidates around mid-1.1800s as traders keenly await FOMC Minutes

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The EUR/USD pair struggles to capitalize on the previous day's goodish rebound from the 1.1800 neighborhood, or a one-and-a-half-week low, and consolidates in a narrow band during the Asian session on Wednesday. Spot prices currently trade just below mid-1.1800s, nearly unchanged for the day.

EUR/USD stalls the previous day’s recovery move from over a one-week low amid mixed cues.
Reviving ECB rate cut bets weigh on the Euro and exert pressure despite subdued USD demand.
Traders now look to the FOMC Minutes for Fed rate cut cues and some meaningful impetus.

Traders now seem reluctant and opt to wait for the release of the FOMC Minutes for more cues about the US Federal Reserve's (Fed) rate-cut path before placing directional bets. The US central bank's policy outlook will play a key role in influencing the US Dollar (USD) price dynamics and providing some meaningful impetus to the EUR/USD pair. In the meantime, bets that the Fed will lower borrowing costs in June and deliver at least two rate cuts in 2026 might continue to act as a headwind for the USD.

Apart from this, concerns about the Fed's independence and signs of progress in the US-Iran talks might contribute to capping the Greenback. Iranian Foreign Minister Abbas Araqchi told reporters that they have been able to reach a general agreement on some guiding principles to resolve the longstanding nuclear dispute. This eases geopolitical risks and boosts investors' confidence, which tends to drive flows away from traditional safe-haven assets and keeps the USD bulls on the defensive.

The shared currency, however, struggles to attract any meaningful buyers amid reviving bets for a rate cut by the European Central Bank (ECB), bolstered by economic weakness in the Eurozone. In fact, the German ZEW survey released on Tuesday showed that Institutional investors’ sentiment about the Eurozone's largest economy deteriorated to 58.3 in February from 59.6 in January. Likewise, the Eurozone’s Economic Sentiment Index unexpectedly fell to 39.4 in February, from 40.8.

Economic Indicator

FOMC Minutes

FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.

Why it matters to traders?

Minutes of the Federal Open Market Committee (FOMC) is usually published three weeks after the day of the policy decision. Investors look for clues regarding the policy outlook in this publication alongside the vote split. A bullish tone is likely to provide a boost to the greenback while a dovish stance is seen as USD-negative. It needs to be noted that the market reaction to FOMC Minutes could be delayed as news outlets don’t have access to the publication before the release, unlike the FOMC’s Policy Statement.

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