The USD Index is holding firm on FOMC Minutes day, with the Greenback mixed versus the majors. Key moves have been in the EUR/USD (-0.57%), GBP/USD (-0.34%), and USD/JPY (-0.14%). Rallies vs the euro and pound sterling are helping March USD Index futures hold the line above 90.000. 

It has been an extremely active day on the forex economic calendar. Aside from the bold Retail Sales and PPI figures, January’s FOMC Minutes have been released to the public. The item wasn’t expected to move markets very much and hasn’t. For now, the Fed talking points regarding COVID-19 uncertainty and the need for accommodative policy remain the go-to narratives.

USD Index Drives Toward 91.000, FOMC Minutes Released

Over the past several months, we have taken multiple looks at the USD Index. And, not much has changed. The downtrend in this market is still very much alive, with prices well beneath the 38% intermediate-term retracement. In fact, it appears as though the late-January USD rally was only a temporary phenomenon.

At this point, a bearish bias toward March USD Index futures is appropriate. Until we see the 91.105 level taken out, the weekly downtrend will remain valid.

Overview: Typically, the FOMC Minutes is one of the forex’s key market drivers. However, today’s release was a ho-hum affair. Here’s a look at a few noteworthy statements:

• November consumer price inflation remained lower than early-2020
• The U.S. labor market deteriorated in December
• COVID-19 and government stimulus were the primary equities market drivers over the intermediate period
• A majority of participants projected that the pace of net asset purchases will remain stable throughout 2021

All in all, there is nothing new to see here. Fed QE is expected to remain in place until at least 2022 and the “path” of COVID-19 is going to be a key factor in any policy decisions. Perhaps the March meeting will shed a bit more light on what the FOMC is thinking for Q2 and Q3.