The US dollar traded lower against the Euro and other major currencies ahead of the highly anticipated release of minutes from the Federal Open Market Committee’s recent meeting. Forex traders scaled back dollar exposure ahead of the key report, which will undoubtedly clarify interest rate expectations for the world’s largest economy.

The euro rallied off of recent multi-week lows, hitting intraday peaks of $1.4103 through time of writing. A sudden jump in speculative interest reportedly sparked an intraday euro rally, with relatively illiquid market conditions forcing large price movements. The British Pound Sterling saw a similar intraday bounce, but the currency nonetheless remained off of yesterday’s close at $2.0338. Uninspiring stock market performance allowed the Japanese Yen to gain against its US counterpart, with the greenback shedding 0.40 Yen to 117.00.

Limited event risk made for initially rangebound conditions ahead of key Fed commentary, with markets hesitant to enter positions ahead of the FOMC minutes. Indeed, the majority of traders seemed willing to take a “wait and see” approach through early-week trade. It remains very difficult to handicap what the Fed might have said in its decision to cut interest rates by 50 basis points in its September meeting, but markets are quite clearly interested in what the central bank had to say—hoping that the Fed will clarify expectations for rates through year-end.

On the one hand, the Fed clearly believed that risks to growth had increased significantly—justifying its decision to adopt aggressive monetary policy accommodation in its sizeable interest rate cut. Yet it is subsequently unclear whether such a move was deemed as the first step in a continued interest rate cutting cycle. Some market commentators claim that the Fed took aggressive “pre-emptive” measures to reduce the need for further interest rate adjustments in the future. If this is indeed true, markets will likely reverse forecasts for a further 25 basis points in cuts through year-end. Given that this has been one of the main sources for US dollar weakness, the greenback would immediately regain ground against major foreign counterparts.

If the Fed says that it saw material risks to growth that would require further rate adjustments, however, we could easily see further US dollar weakness. It is difficult to predict what exactly the central bank said in its September 18 meeting, and the event is virtually guaranteed to force volatility regardless of the outcome.

The Dow Jones Industrial Average was broadly unchanged in the moments leading up to the FOMC release, up 0.2 percent to 14,070. The key stock market index has surged to record highs on expectations that the Federal Reserve would continue cutting interest rates through year-end. Such a trend leaves it quite clearly susceptible to any shift in sentiment on interest rates, and traders remain very hesitant to hold positions ahead of the afternoon’s event risk. The S&P 500 was similarly unmoved at +4 points to 1,556, while the NASDAQ Composite added 7 to 2,794.

Trading in Treasury Bonds was likewise uneventful, with yields remaining near Friday’s close. The 2-Year Note yield added 1 basis point to 4.09 percent, while the 10-year Note lost 1bp to 4.63 percent.

David Rodriguez is a Currency Analyst at FXCM.