Will FOMC Minutes Point to Credit Worries?

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EUR/USD crashed yesterday despite very good US fundamental data releases breaking through its support at 1.4225 as predicted by my yesterday’s post - see above EUR/USD Chart.

Earlier this morning, the Euro-zone posted 2Q GDP at -0.1%, a 2Q Household consumption rise to 0.2% and a Gross Capital drop to 1.3%. In response, the Euro consolidated its drop and staged a mild rally.

Elsewhere, UK PMI Construction registered a weaker than expected 47.7. In recent hours, the GBP has surged against the USD reaching 1.6230 after yesterday’s sell-off.

Today’s main risk events are the 8.15am EST release of the USD ADP Employment Change for August and the 2.00pm EST publication of the USD FOMC Minutes.

The ADP report is expected to show a further drop in employment of 250k jobs. The FOMC could raise concerns about bank lending and deteriorating credit facilities.

If the EUR/USD can muster enough energy to force a bullish crossover , see chart above, then it could rally to 1.4275 or even 1.4345. Otherwise, further weakness looms with tests of 1.4175 and 1.4125 likely.