EUR/USD remains under pressure below 1.17, trading at the lowest since November 2020. The dollar is gaining ground after the Fed\s meeting minutes signaled tapering of its bond-buying scheme is on the agenda. Worries about covid are also weighing on sentiment.

Euro/dollar is suffering from oversold conditions according to the Relative Strength Index (RSI) on the four-hour chart. The drop below 30 implies a bounce is due. Other indicators such as momentum and the Simple Moving Average are pointing lower. 

Immediate support awaits at the fresh 2021 trough of 1.1665. The next level to watch is the double-bottom of 1.1610 set in late 2020. Further down, 1.15 is a noteworthy psychological barrier. 

The broken 1.17 level is the first level of resistance. It is followed by 1.1720, which support EUR/USD last week, and then by 1.1740, which was Wednesday’s swing high.

Given the Fed Minutes yesterday the main takeaways being that the ‘Taper is coming: The Federal Reserve’s meeting minutes from the July gathering suggested that the bank is tilting toward reducing its bond-buying scheme already in 2021. Many in the committee judged that the threshold of “substantial further progress” has been met. 

Perhaps the most significant reason to be more cheerful than the current gloom comes from comments hidden deeper in the minutes. Here is the quote: “Many participants noted that, when a reduction in the pace of asset purchases became appropriate, it would be important that the Committee clearly reaffirm the absence of any mechanical link between the timing of tapering and that of an eventual increase in the target range for the federal funds rate.”

The Fed will not automatically raise interest rates when it finishes its tapering process. That distinction, supported by “many” should also prompt a rethink. 

The bank’s next big event is Fed Chair Jerome Powell’s speech in Jackson Hole late next week. Will he hint that a tapering announcement is coming in September? Probably not.