FXOpen
Last night, the FOMC meeting minutes were released. According to USNews, there were no major surprises. However, the confirmation of persistent inflation – along with hints that some officials discussed potential future rate hikes – displayed a "hawkish" stance. The dollar index initially rose following the minutes' release but returned to pre-release levels this morning, suggesting the initial reaction might have been incorrect.
Subsequently, the Purchasing Managers' Index (PMI) data for key European economies was published. According to ForexFactory:
→ Flash Manufacturing PMI (France): actual = 46.7; expected = 45.8; previous = 45.3;
→ Flash Services PMI (France): actual = 49.4; expected = 51.8; previous = 51.3;
→ Flash Manufacturing PMI (Germany): actual = 45.4; expected = 43.4; previous = 42.5;
→ Flash Services PMI (Germany): actual = 53.9; expected = 53.5; previous = 53.2.
Overall, the actual PMI figures, considered a leading indicator of economic health, exceeded expectations and gave the euro a bullish push.
The combined effect of the euro's rise and the dollar's decline since midnight resulted in a four-hour EUR/USD chart candle with a long lower tail (indicated by an arrow), suggesting demand outweighs supply. A subsequent bullish candle could confirm this.
Technical analysis of the EUR/USD chart shows:
→ The price is within an ascending channel;
→ The 1.081 level served as resistance from 1-13 May but, following a bullish breakout on 14 May, now shows signs of support. This level is reinforced by the lower boundary of the ascending channel and the fundamental news mentioned above.
Thus, euro bulls might attempt to resume the trend and lift the EUR/USD rate to the significant resistance at 1.08750, established in April. The first test of their resolve could be the former support at 1.08466.
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