The FOMC minutes, published on Wednesday evening, showed that the Committee's target "further significant progress" should be considered unfulfilled for now. A number of participants noted that they expected that the conditions for starting to reduce the pace of asset purchases would be met earlier. There are no unexpected hawkish comments in the minutes, which led to a drop in yields (10-year UST declined below 1.3%). At the same time, stock indexes were trading with minimal growth.

The CEO of the Federal Reserve Bank of Atlanta, Mr. Bostic, said a little later that he expects high inflationary pressures to ease, but does not see the possibility of inflation returning below 2%. The Fed is approaching to reduce assets, but an early rate hike will inevitably have a negative impact on the economy.

The issue of rates is extremely important for the economy, since it allows to predict the direction of investment flows. The investor is interested in getting more returns, with all other things being equal, and from this point of view, the US dollar is losing at the current stage. The comparison of real returns in the Euro area (the rate minus inflation) and in the US is clearly not in favor of the latter.

At the moment, the real rate in the US is too low. The situation can be changed either by lowering inflation, but this cannot be done while there are huge injections made into the economy as part of support or by raising the rate. However, the United States simply will not have the resources to service the rising debt at the current level of the budget deficit. The situation is deadlock, and it is still unknown how the Fed will get out of it.

In general, it can be assumed that the yield spread is not in favor of the US dollar, which explains the significant preponderance of the euro in the futures market. If the Fed and the Biden government do not find a way to increase real yields, then the national currency will simply not have a driver for growth in the long term.

EUR/USD

Germany has published data on industrial production for May, which looks somewhat disappointing. It is expected that the shortage of raw materials will put pressure on the real sector in the short term.

Despite the fact that the ZEW indicator of economic sentiment for Germany has fallen to 63.3 points, it still remains at a very high level (at the highest since 2007). As noted in the ZEW release, it is expected that the situation in the economy will be exceptionally positive in the next 6 months.

On Thursday morning, the Euro currency is trading near the lower border of the triangle. An upward reversal with the target of 1.22 is technically justified, as the volatility is low due to the lack of a significant impulse. At the same time, there are no fundamental reasons for the reversal. Today, the minutes of the ECB's June meeting will be published, and on Friday, the ECB President Lagarde will speak.

There are more attention to the close publication of the strategic review, where the inflation target is expected to be revised to 2%. It is unlikely that the euro will be able to return to a sustainable growth trajectory before the ECB meeting on July 22.

GBP/USD

The UK is preparing for the full opening of the economy on July 19, but simultaneously with the approach of this date, a mutation of the coronavirus called Delta is coming at an even faster pace. It is predicted that the number of requests for medical care may reach 50 thousand per day. Nevertheless, the UK government believes that the number of cases will grow without an increase in mortality due to mass vaccination.

In any case, the pound bulls have no reason to go on the offensive, since the situation can change in a negative direction at any moment.

On Friday, data on foreign trade, industrial production and GDP growth will be published. A deviation from forecasts in the negative direction may provoke a sell-off of the pound. The nearest target is 1.3670, followed by the support zone of 1.3510/30. It is not yet time to buy deals.