In the absence of important data and big events, the US Dollar's bounce is the path along the line of the least resistance. Today, the release of FOMC Meeting Minutes is attracting attention, but the market participants may have too high expectations.
The US Dollar continues to rebound this week, although it is difficult to attribute this to a greater extent, such as a temporary rebound of the last wave of weaknesses. The lack of key events and publications encourages the reduction of positions, because it does not look like the global investors will have to deal with the mass opening of long positions in USD yet. Although many economists do not agree with the scale of the US Dollar's decline in recent weeks, such alleged sell-off arguments (double US deficit, a strength of the global recovery, mild expectations towards the Fed against other central banks) have not weakened. It does not change the fact that EUR / USD and USD / JPY easily break the levels of support/resistance.
Today, the calendar is starting up a bit with the main attention to the report of the FOMC meeting. It seems that the market had expectations for hawkish notes in the document that would strengthen the argumentation for three or more interest rate hikes this year. Assessment of inflation outlook and attitudes towards rate hikes will be an important starting point for the new FOMC Chair J. Powell, although one can not forget that the document will not present FOMC views on recent market turmoil and strong CPI reading for January (the FOMC meeting is ahead of these events). In the current climate, the FOMC Metting Minutes release might turn out to be a big disappointment.
Let's now take a look at the EUR/USD technical picture in the H4 time frame. The market is still being supported by the levels of 1.2333 - 1.2295 and only a sustained, impulsive breakout below this levels would bring the bears back to control over this market. Please notice the market conditions are entering the oversold levels. The next technical resistance is seen at the level of 1.2384, 1.2408 and 1.2434.
