Selling EURUSD to 1.1053

The Federal Reserve appears to be very much on track for an interest rate cut in September. A vast majority of officials said such an action was likely, according to the minutes of the U.S. central bank's July 30-31 meeting.

The minutes, which were released yesterday, even showed some policymakers would have been willing to reduce borrowing costs at last month's gathering.

At the July meeting, most policymakers thought that "if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting," the minutes said.

They also noted "many" Fed officials viewed the stance of rates to be restrictive and "a few participants" contended that amid an ongoing cooling in inflationary pressures, no change in rates would mean that monetary policy would increase the drag on economic activity.

The case for cutting rates rests on the ebbing of price pressures back to the central bank's 2% target and increased anxiety about the state of the job market in the wake of recent data showing a rise in the unemployment rate.

The speed of the jump in the jobless rate, which bottomed at 3.4% early last year and has since climbed to 4.3% as of last month, has added urgency to the debate over rate cuts and has prompted some analysts to say that a half-percentage-point reduction in borrowing costs should be considered next month.

Markets are likely to get an update of Powell's views on Friday when he speaks at the Kansas City Fed's annual research conference in Jackson Hole. A number of other Federal Reserve Bank officials are also likely to speak on the outlook.

Another major point for the monetary policy outlook comes in early September with the U.S. Labor Department's release of the employment report for August.

There is a lot of evidence for caution ahead of Chairman Jerome Powell's speech in Jackson Hole. It is possible that the Fed chief will be very restrained in his assessments, which will serve as a signal for a short-term strengthening of the U.S. dollar, including against the euro.

In terms of technical analysis, the conditions for a downward correction in EURUSD have long been in place, as the pair appears extremely overbought on the hourly timeframe.

The overall recommendation is to sell EURUSD.

Profit could be taken at 1.1053. A stop loss could be set at 1.1190.

The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, does not exceed 2% of your deposit.