Apart from the key inflation data, which could determine the next moves of the Fed, investors will take a closer look at how policymakers made one of their most difficult decisions in recent years - ignoring the bankruptcies that rattled markets last month.
It was a surprise that the Fed continued to hike rates in March and let it hit a range of 4.75%-5%. The decision sparked a debate among economists over whether or not it was correct. Chairman Jerome Powell also said the central bank will continue to fight against high inflation despite all the turmoil in the banking sector.
Today's minutes will shed light on how the members reached consensus and how much uncertainty exists in their actions. At any rate, it is clear that inflation remains number one on their agenda.
As mentioned earlier, the Fed continued to increase rates last March even though three US banks already filed for bankruptcy. It is still unclear how extensive the consequences of this crisis will be after the central bank canceled all emergency liquidity provision programs, but officials have no choice but to continue hiking rates because inflation is still above the 2% target.
Of course, such a move may exacerbate the banking crisis, and a momentary decrease in interest rates will not fix the situation overnight. That is why market players are unsure what path the central bank will take in the future, especially since the Fed said that "some" additional tightening may be warranted. They also changed their forecast for rates to 5.1% by the end of the year, but market participants have a different view, believing that there will be a cut in December.
In terms of the forex market, euro bulls have a chance to continue a rally and update the March highs, but in order to do so, the quote has to stay above 1.0900 and regain control of 1.0930. This will allow a rise beyond 1.0970 and towards 1.1000 to 1.1035. In case of a decline and lack of bullish activity around 1.0900, the pair will fall further to 1.0860 and 1.0835.
Pound bulls also continue to have control over the market. However, the quote has to hit 1.2455 and consolidate above 1.2480. That will trigger a much larger rise to 1.2520 and 1.2560. In case there is a decline, bears will attempt to take 1.2420, which could lead to a further fall to 1.2380 and 1.2340.