Release of FOMC minutes is a top macro event of the day (7:00 pm BST). Fed Chair Powell hinted that the document will include details on discussions on balance sheet reduction. So far, market expectations are for a quantitative tightening announcement during a meeting in May with an immediate launch, on top of a more and more likely 50 basis point rate hike. Minutes are likely to confirm expectations on timing of QT start. However, what remains uncertain is pace of balance sheet reduction. Some Fed members, like for example Vice Chair Brainard, said that balance sheet runoff will be rapid. Pace of quantitative tightening will be a key thing to watch in today's minutes.
Release is expected to trigger some additional volatility on the USD market, and potentially on the stock market as well. Taking a look at the USDCHF chart, we can see that the pair managed to defend support level at 0.9200, marked with 38.2% retracement of early-2021 rally. This area was also marked with lower limit of market geometry therefore a bounce seems to confirm mid-term upward trend. The pair is approaching a resistance zone at 0.9370 and should bulls manage to break above it, way towards 2021 and 2022 highs will be left open.
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Source: xStation5
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