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USD rally looks to FOMC for support - TD Securities

FXStreet (Łódź) - The TD Securities team of analysts suggest that the minutes from the Fed's last monetary policy meeting, due out later today, could carry a more constructive message on the outlook for the US economy.

Key quotes

"A more constructive message on the outlook— especially with regard to inflation and just how much slack there is in the labour market—from today’s FOMC minutes risks pushing US yields a little higher still as US Treasuries shake off more the recent safe-haven bid and get back to the business of fundamental drivers."

"Our US fixed income colleagues feel that the risks around the minutes are geared towards slightly higher yields—a further plus for the USD."

"EURUSD, which reached an 11-month low today, is bending under the pressure of fundamental and monetary policy divergence at the short and long-end of the yield curve."

"Technically, we look for EURUSD to fall back to the low 1.32 area from here but, having broken below the base of the recent consolidation range—a bearish signal more broadly—we look for EURUSD to push below 1.30 in the next 1-2 months."

"Bear trend momentum is strong and is likely to allow only limited counter-trend corrections to develop in what looks to be a powerful underlying bear move in development. We look for resistance in the low 1.33s from here."

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