EUR/USD dips below 1.0900 as Fed’s minutes show split views amongst Fed officials

• Fed officials emphasize commitment to achieving the 2% inflation objective, with many seeing the need for further tightening.
• A split emerges among policymakers, with some advocating for unchanged rates, highlighting the economy’s resilience and potential risks.
• EUR/USD reacts with a drop, hovering around the 1.0880s, marking its lowest point since mid-August.

EUR/USD dropped below 1.0900 for the second straight day, as the latest Federal Reserve (Fed) monetary policy minutes began to show policymakers are split between overtightening while others prioritize the fight against inflation. The EUR/USD trades volatile, between the daily low of 1.0870s and the 1.0900 figure.

Federal Reserve minutes reveal a divided board on rate decisions, with inflation concerns at the forefront

The minutes showed that all the Fed officials remain “resolute in their commitment to bring inflation down to the …2% objective,” with most participants estimating that upside risks on inflation would require additional tightening.

Nevertheless, the Fed board began to show a split stance regarding monetary policy as a “couple” of participants wanted rates to be left unchanged, with one of the members, Atlanta’s Fed President Raphael Bostic, having remained vocal about holding rates unchanged.

The minutes showed that even though the economy’s remained resilient, downside risks to economic activity are lingering, and upside risks to the unemployment rate.

Federal Reserve officials agreed that future rate decisions would depend on the “totality” of incoming data while taking a more cautious approach in the coming months.

EUR/USD Reaction

The EUR/USD dropped below the 1.0900 figure, extending its losses below the 1.0880 area, a level last seen on August 14, slightly below the S1 pivot, which acted as support, as the EUR/USD sits at around the 1.0880s area.

EUR/USD Technical Levels