EUR/USD Sinks As FOMC Minutes Show Threat Of Fed Tapering

EUR/USD price action just pivoted sharply lower during afternoon trade on Wednesday as markets digested the latest FOMC minutes. The US Dollar is strengthening sharply in response to fresh Fed taper fears as “a couple” of officials hinted at the “risks of inflation pressures building up to unwelcomed levels.” Some Fed officials also noted how they were worried about the levels of market risk-taking.

EUR/USD PRICE CHART: 15-MINUTE TIME FRAME (19 MAY 2021 INTRADAY)

EURUSD Price Chart US Dollar Fed FOMC Minutes Taper

Chart by @RichDvorakFX created using TradingView

The corresponding influx of US Dollar strength due to fresh Fed taper fears sent EUR/USD dropping by more than 30-pips to fresh session lows. US Dollar buying pressure came alongside a spike in Treasury bond yields with the ten-year rising over 4-basis points. That said, the Fed echoed how it “would likely be some time” before the economy makes substantial further progress toward its policy goals before warranting a move to taper asset purchases.

A number of FOMC officials suggested, however, that it might be appropriate to begin discussing a plan for adjusting the pace of asset purchases at upcoming Federal Reserve meetings if the economy continues to make progress toward its maximum employment and price stability goals. This stands to keep the US Dollar in demand and EUR/USD price action under fire if the risk of Fed tapering continues to gain more traction.

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