The US dollar barely reacted to yesterday's minutes from the Federal Reserve's May meeting, which essentially confirmed what markets had already been expecting.

It is clear the regulator finds itself in a situation where it is impossible to both cut and raise rates at the same time, and that is why it is doing nothing. The minutes state that nearly all committee members voted to keep the policy rate unchanged. The sole exception was one participant who voted for a 25?basis?point cut out of concern that policy might be too tight and the labor market could soften.

More importantly, a majority of Fed officials explicitly acknowledged that a rate hike could become necessary if inflation remains persistently above 2%. This is no longer an abstract scenario — it is the official position recorded in the minutes.

The inflation picture offers little cause for optimism. The Fed notes rising prices for energy, transportation, airfares and a range of goods — all direct consequences of the Middle East conflict and tariff pressures. The labor market formally remains stable, but job growth is weak, and the Fed worries that even a small deterioration in consumer demand could quickly push unemployment up. Economic activity, meanwhile, continues to expand — driven primarily by consumer spending and AI?related investment.

Markets reacted to the minutes as expected: expectations for rate cuts have shifted further out, and the probability of a hike in 2027 has risen to roughly 30%. For the dollar, this is mildly positive — the Fed's wait?and?see stance amid persistent inflation supports the US currency better than any hints of easing. Some committee members still allow for cuts later this year if inflation begins to abate and the labor market weakens. In other words, everything again hinges on the Strait of Hormuz and the situation in the Middle East, which may continue to sustain an energy shock and price pressures for some time.

As I noted above, there was no significant reaction in the FX market to the minutes.

Technical outlook for EUR/USD

Buyers now need to focus on taking out the 1.1610 level. Only that would allow a test of 1.1635. From there, a move up to 1.1660 is possible, but doing so without support from big players will be difficult. The ultimate target is 1.1690. On the downside, I would expect serious buying interest only around 1.1590. If there is no one there, it would be prudent to wait for a new low at 1.1570 or to open long positions from 1.1550.

Technical outlook for GBP/USD

Pound buyers need to take the nearest resistance at 1.3415. Only then can they aim for 1.3445, above which further progress will be difficult. The ultimate target is around 1.3475. On a downside break, bears will try to take control of 1.3380. If they succeed, a range breakout would inflict serious damage on bulls and push GBP/USD toward 1.3340, with a potential extension to 1.3300.