EUR/USD – Euro Edges Higher, Markets Eye US Inflation, Fed Minutes

EUR/USD continues to post slow but steady gains. In the Wednesday session, the pair is trading at 1.2384, up 0.22% on the day. On the release front, there are no major German or eurozone events this week. ECB President Mario Draghi will speak at an event in Frankfurt. In the US, today’s highlight is consumer inflation. CPI is expected to dip to 0.0%, and Core CPI is forecast to remain at 0.2%. As well, the FOMC releases the minutes of its March rate meeting. On Thursday, the ECB releases the minutes of its March rate meeting and the US publishes unemployment claims.

The markets are keeping a close eye on Wednesday’s key releases – CPI and the FOMC minutes. Both events could provide clues regarding the Federal Reserve’s monetary policy for 2018. Will the Fed press the rate trigger three times this year, or four? The current Fed forecast calls for three rate hikes, but this could be revised upwards if inflation rises. If the FOMC minutes point to a hawkish stance from policymakers, the US dollar could respond with gains.

The tariff spat between the US and China appears far from over, but both sides have lowered the flames which ahs roiled the markets in recent weeks. Investors are breathing a sigh of relief after Chinese President Xi Jimping sent out a conciliatory message on Tuesday. Xi was speaking at a development conference in China, and promised to lower tariffs on vehicle imports into China. This has been a major sticking point between the US and China, with President Trump complaining that China has a 25% tariff on US vehicle imports, yet the US only charges 2.5% on Chinese vehicles. Xi added that China was looking to solve issues through dialogue rather than confrontation, and the markets are hoping that the US and China can avert a trade war, which could drag down the global economy.

Xi is music to the markets ears

Syria Risks Offset Trade Truce

EUR/USD Fundamentals

 Wednesday (April 11)

• 4:00 Italian Retail Sales. Estimate 0.3%. Actual 0.4%
• 5:34 German 30-year Bond Auction. Actual 1.12%
• 7:00 ECB President Mario Draghi Speaks
• 8:30 US CPI. Estimate 0.0%
• 8:30 US Core CPI. Estimate 0.2%
• 10:30 US Crude Oil Inventories. Estimate -0.6M
• 13:01 US 10-year Bond Auction
• 14:00 US FOMC Meeting Minutes
• 14:00 US Federal Budget Balance. Estimate -191B

 Thursday (April 12)

• 14:45 French Final CPI. Estimate 1.0%
• 15:00 Eurozone Industrial Production. Estimate 0.1%
• 7:30 ECB Monetary Policy Meeting Accounts
• 8:30 US Unemployment Claims. Estimate 231K
• 12:00 German Buba President Weidmann Speaks

*All release times are DST

*Key events are in bold

EUR/USD for Wednesday, April 11, 2018

EUR/USD for April 11 at 7:10 DST

Open: 1.2356 High: 1.2388 Low: 1.2351 Close: 1.2384

EUR/USD Technical

EUR/USD has posted small gains in the Asian and European sessions

• 1.2319 is providing support
• 1.2460 is the next resistance line

Further levels in both directions:

• Below: 1.2319, 1.2235, 1.2092 and 1.2025
• Above: 1.2460, 1.2581 and 1.2662
• Current range: 1.2319 to 1.2460

OANDA’s Open Positions Ratio

EUR/USD ratio is showing slight movement towards short positions. Currently, short positions have a majority (56%), indicative of EUR/USD reversing directions.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.