Investing.com -- EUR/USD surged more than 1% extending considerable gains from the prior session, as currency traders analyzed dovish minutes from the Federal Open Market Committee's July meeting which provide support for a potential delayed interest rate hike.
The currency pair traded between 1.1107 and 1.1244 on Thursday, before settling at 1.1239, up 1.08% on the session. It marked the first time the euro closed above 1.12 against the dollar for the month of August. The euro is now up roughly 3.75% against its American counterpart over the last month of trading following the considerable two-day romp.
EUR/USD likely gained support at 1.0808, the low from July 20 and was met with resistance at 1.1411, the high from June 22.
Investors continued to digest the minutes from the FOMC's July meeting on Thursday, ones in which the Fed offered no clear indications on an imminent rate hike. The FOMC appears particularly concerned with the deceleration of inflation, as it continues to remain under its long-term targeted goal of 2%. While the Consumer Price Index (CPI) inched up 0.1%, it still fell under analysts' forecasts of a 0.2% monthly gain. The Core CPI Index, which strips out food and energy prices, rose by 1.8% on a yearly basis, also falling below the Fed's target by 0.2%.
The FOMC appears sharply divided on whether inflation is moving close to a level it deems appropriate to start raising short-term rates. The FOMC said by some objectives the inflation data was "not progressing" toward its targeted goal, according to the minutes. Other members, however, said that inflation conditions for a rate hike would be met or could be "met shortly."
The Fed's benchmark Federal Funds Rate has remained at its current level between zero and 0.25% since 2009 at the conclusion of the Financial Crisis. In addition, nearly a decade has passed since the Fed has last raised the benchmark rate. Although Fed chair Janet Yellen has indicated that it is likely the FOMC will lift its benchmark Federal Funds Rate in 2015 if economic conditions continue to improve, the Fed has not said definitively that lift-off will occur in September. Following the dovish reading on Wednesday, a large percentage of inventors now believe it is more likely that lift-off will take place in December.
Elsewhere, Alexis Tsipras formally resigned from his position as Greek prime minister on Thursday, opening the door for snap elections in late-September. The resignation came one day after Greece received the first tranche of a €86 billion bailout from its international creditors, deemed necessary to stave off bankruptcy. Tsipras, who was elected seven months ago, was forced to abandon his Syriza party's anti-austerity platforms in order to secure a critical multi-year bailout through the European Stability Mechanism.
Government bond yields plummeted throughout the globe, amid fears of a worldwide economic slowdown. The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell 0.65% to close at 95.74, in spite of optimistic U.S. employment and manufacturing data. As a result, the index fell to its lowest level in more than a month.