The FOMC meeting minutes for the April meeting were relatively hawkish, boosting the dollar across the board and the euro could not resist. It trades at a very nice level of support.

What did the Fed actually say? What’s next for the pair?

June Hike?

The meeting minutes showed that the Fed remains data dependent, but if the data is OK, a rate hike is certainly an option, even if the Brexit referendum held one week afterwards poses a risk.

Here is a quote from the minutes that explicitly talks about June (conditions apply, but we’re talking about most participants):

Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labor market conditions continuing to strengthen, and inflation making progress toward the Committee’s 2 percent objective, then it likely would be appropriate for the Committee to increase the target range for the federal funds rate in June

The emphasis is mine and the message is extremely cautious but still there.

The implied probability for a rate hike jumped from single digits to 33% at the time of writing and for the July meeting it already stands at a majority. It’s important to remember that there is no press conference in July, making the real chances lower than bond markets suggest.

EUR/USD and the FOMC Minutes

EUR/USD dropped below the 1.1250 level that supported it ahead of the publication and also worked very nicely as support in early April. It is currently battling the next range which is very close: 1.1215 to 1.1220, an area which provided support later in April.

Significantly lower we find significant support at 1.1150: the line worked very nicely as support in late March, just after that Fed meeting. Further down the road, we find 1.1070 which served in both directions and is the last line before the round 1.10.

In case of a bounce (which is possible as the Fed was not extremely hawkish), resistance awaits at 1.1335, the bottom of a higher range. Weak resistance stands at 1.1410, followed by the very strong cap at 1.1460.