EUR/USD is drifting in the Tuesday session. Currently, the pair is trading at 1.1761, up 0.12% on the day. On the release front, German Wholesale Price Index jumped 0.3%, edging above the estimate of 0.2%. In the U.S, today’s key indicator is CB Consumer Confidence, which is expected to climb to 132.2 points. On Wednesday, the spotlight will be on the Federal Reserve, which is likely to maintain interest rates at a range between 2.00% and 2.25%.
The euro punched past the 1.18 line on Monday. This followed hawkish remarks from ECB President Mario Draghi, who was testifying before the European Parliament Economic and Monetary Affairs Committee. Draghi said there had been a “relatively vigorous pick-up in underlying inflation”. With regard to the ECB’s forward guidance, Draghi said that the ‘”through the summer of 2019″ was a timeline in which conditions warrant a first rate increase. This means that the September meeting will be a live meeting, with many analysts predicting a rate hike in December.
Trade tensions have escalated this week, with the U.S and China slapping tariffs on each other. On Monday, the U.S imposed tariffs on some $200 billion worth of Chinese goods, while China responded with tariffs of $60 billion on U.S products. There may be more headwinds ahead, as China sharply attacked the U.S, saying it had plunged “a knife to China’s neck” with the new tariffs. The Chinese have canceled trade talks with the Trump administration, and no new talks are likely to be held until the mood improves between the world’s two largest economies. Previous rounds of tariffs between the two economic giants have boosted the U.S dollar, but so far, investors have reacted calmly and have not dumped their euro assets in favor of the greenback.
