The minutes of the Fed's March meeting published yesterday turned out to be hawkish: the rhetoric of the document was quite harsh. This fact suggests that the American regulator will decide on a 50-point rate increase not only at the May meeting, but also following the results of the June meeting.

In general, the document did not become a sensation – many of the theses mentioned in the text of the protocol were voiced by representatives of the Federal Reserve after the March meeting. In addition, after the March meeting, more recent key data on the labor market and inflation were published. All these releases were on the side of the greenback, reinforcing hawkish expectations. Therefore, the minutes published yesterday only stated an already well-known fact: Fed members are ready for a more aggressive pace of monetary policy tightening.

Fed members signaled at the end of the March meeting that the pace of rate hikes in the current cycle will differ from previous similar cycles. In the minutes of the January meeting, this issue was developed in more detail – it stated that "the members of the Committee consider it appropriate to increase rates faster than after 2015, but on the condition that inflation does not decrease." We are talking about a three-year period of raising the rate from December 2015 to December 2018. The pace of monetary tightening during this period was indeed quite measured. The rate was first raised in December 2015, then in December 2016, then in February, March, June, July, September, and December 2017; and then in March, June, September, and December 2018. During this period, the rate was raised from 0.25% to 2.5%.

At the March meeting, the regulator was more forthright. The minutes indicate that many members of the Fed believe that a rate hike of 50 basis points at once "at one or more upcoming meetings" would be justified. Again, unless inflation in the U.S. starts to decline, which is highly unlikely.

In other words, the protocol published yesterday confirmed, in particular, the forecasts of Goldman Sachs analysts and many other experts. According to their scenario, the regulator will raise the rate by 50 points twice, in May and June. Then four increases of 25 basis points at each subsequent meeting until the end of this year.

Also, Fed members at the March meeting signaled their readiness to start reducing assets on the balance sheet of the Central Bank. Here, too, the Fed is similarly poised to realize a faster pace of balance sheet reduction than it did in the period 2017-2019. The protocol states that the regulator will begin to reduce assets on the balance sheet of the Central Bank in increments of $95 billion per month ($35 billion in mortgage-backed securities and $60 billion in U.S. government bonds). Members of the Committee came to a common opinion that the Fed can agree on a program for the sale of assets already at the May meeting. It is worth noting that most experts previously expected a reduction range of 60 to 90 billion per month. Therefore, the proposed 95 billion move allowed the dollar bulls to feel more confident throughout the market, including against the euro.

The U.S. currency is also supported by geopolitical factors. Negotiations between Russia and Ukraine are dragging on, and, apparently, no breakthrough is to be expected in the medium term. This assumption was indirectly confirmed today by the representative of the President of Turkey. He said he did not expect a major breakthrough in the negotiations between Moscow and Kyiv "in the next couple of days or even weeks." The main reason is the lack of consensus between Russia and Ukraine "on certain points of negotiations."

However, geopolitical risks are not limited to Eastern Europe. The situation in Asia is also worrisome – the "Taiwan case" is again on the agenda. The day before yesterday, it became known that Taiwan received American weapons and military equipment, U.S. Secretary of Defense Lloyd Austin said. Beijing responded with a strong protest. The official representative of the Chinese Foreign Ministry said the Pentagon's actions are undermining China-US relations and disrupting peace in the Taiwan Strait. The Chinese authorities regard the supply of American weapons to Taiwan as a violation of bilateral agreements and an infringement of the national interests of the PRC. Let me remind you that earlier, Chinese officials have repeatedly stated that the country is ready to use force to prevent movement towards the official independence of Taiwan, which is considered a breakaway province of China.

All this suggests that short positions on the EUR/USD pair are still a priority. It is advisable to use corrective upward pullbacks to enter sales. Longs, in turn, are risky, given the favorable fundamental background for the strengthening of the U.S. currency. The first target is 1.0860 (the lower line of the Bollinger Bands indicator on the daily chart). A breakdown of this support level will open the way to the annual price low, that is, to the target of 1.0806.