The last time the FOMC Meeting Minutes were announced was on July 11th. The range for the EURUSD going into the announcement was as modest 70 pips (the current range for today is 57 pips). The price just prior to the headlines was at 1.2262. The 100 and 200 bar MA on the 5 minute chart were converged at that level. Today, the 100 and 200 bar MA on the 5 minute chart is at the 1.2460-61 level (also converged). The current price is just above those levels at the 1.2470 level currently. Clearly, the headlines were going to dictate the move back in July. It seems today, the headlines and interpretation, will help dictate the move as well.

After the headlines were broadcast – last time – the price spiked to 1.22737 in the first few seconds. However, the price quickly reversed, moved below the MA level and trended down quickl (see chart above). The low extended down to 1.2112 – 60 pips from the high. The entire move occurred in 15 minutes. From that point, the market consolidated and then rallied back toward the 100 bar MA (see blue line in the chart above) before settling in for the day. An Asian consolidation, held against the 200 bar MA and another leg down ensued in the next trading day (see chart above).

What were the reactions from the headlines. Below is a sampling of the headlines.

  • FOMC Don’t appear fully committed to more QE YET
  • Threshold for more QE still quite high
  • Stocks drop to session lows after Fed Minutes. Disappoints investors
  • Fed officials divided over threshold for more action
  • Dollar advances versus Euro as Fed Minute disappoints investors

There were other more negative reviews:

  • Fed officials warn of looming crisis for economy
  • FOMC minutes signal serious consideration of fresh action.

Of course, these are the minutes. The FOMC Statements from the last two meetings are already comparable. The major changes of the most recent FOMC Statement vs the prior Statement includes the following,

  • “Econonomic activity decelerated somewhat over the first half of the year” (most recent) vs. “The economy has been expanding moderately this year” (prior)
  • “The committee will closely monitor incoming information on economic and financial developments and will provide additional accomodation as needed….” vs. ” The committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years….(Yada, yada, yada i.e. Operation Twist). This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accomodative….The committe is prepared to take further action as appropriate…”

That’s it.

Movement today will be based on interpretation – just like it was in July. I will be watching the 100 and 200 bar MAs for clue 1. Move below bearish. Stay above bullish (give it a few minutes after the headline before acting).

On the topside the 1.24865 high is followed by 1.2500 and 1.2515 (38.2% of the move down from May 1. A move above 1.2515 should open the more for further advances.

On the downside, a move below the 100 and 200 bar MA (at 1.2460) looks to 1.2442, 1.2430, 1.24129 (38.2% of the move higher this week), 1.2390 and the 100 hour MA at 1.2380.