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EUR/USD fell on Wednesday after minutes from the Federal Reserve’s latest meeting showed that the Federal Open Market Committee (FOMC) was determined to wait for more evidence that inflation will slow to 2%, which reduced market risk appetite as expectations for rate cuts were sought. Investors had hoped for a dovish tone from the Fed.
While the minutes from the Fed’s latest meeting did not directly rule out a rate cut in September, investors are increasingly nervous that the central bank will not be able to find enough conclusive data that inflation is clearly approaching the central bank’s 2% annual inflation target. The CME FedWatch Tool shows that the probability of a 25 basis point rate cut in September has dropped to 60%.
