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EUR/USD remains under pressure despite the mixed reaction to the Federal Open Market Committee (FOMC) Minutes, and the pair stands at risk for a larger correction as it carves a fresh series of lower highs & lows.

The summary of former-Chair Janet Yellen’s last meeting suggests the central bank will continue to implement higher borrowing-costs over the coming months as ‘a majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate.’ With that said, the FOMC under Chairman Jerome Powellmay prepare U.S. households and businesses for an imminent rate-hike as a number of 2018-voting members are scheduled to speak over the coming days, but Fed officials may continue to project a longer-run neutral rate of 2.75% to 3.00% at the March meeting as ‘some participants saw an appreciable risk that inflation would continue to fall short of the Committee's objective.’

Keep in mind, the account of the European Central Bank’s (ECB) January meeting may also spark a mixed reaction as President Mario Draghi and Co. largely endorse a wait-and-see approach for monetary policy, but more of the same from the Governing Council may keep the euro-dollar exchange rate under pressure especially as the central bank warns the ‘recent volatility in the exchange rate represents a source of uncertainty.’ Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

EUR/USD Daily Chart

EUR/USD Daily Chart

Keep in mind, the broader shift in EUR/USD behavior may continue to take shape in 2018 as the ECB moves away from its easing-cycle, but the pair may face a larger pullback over the days ahead as it carves a fresh series of lower highs & lows.

At the same time, the Relative Strength Index (RSI) appears to be deviating with price, with the oscillator on the cusp of flashing a bearish trigger as it threatens the upward trend carried over from late last year. In turn, the 1.2230 (50% retracement) region is on the radar as it sits just above the February-low (1.2206), with the next downside region of interest coming in around 1.2130 (50% retracement). Want to learn more about popular trading indicators and tools such as the RSI? Download and review the FREE DailyFX Advanced trading guides!

--- Written by David Song, Currency Analyst

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