EUR/USD is showing little movement in the Tuesday session. Currently, the pair is trading at 1.1363, down 0.04% on the day. On the release front, Germany releases ZEW Consumer Sentiment, which is expected to drop to -18.8 points. Eurozone ZEW Economic Sentiment is forecast to improve slightly, with a forecast of -20.1 points. In the U.S., the sole indicator is Existing Homes, which is expected to drop to 5.27 million. On Wednesday, the eurozone releases consumer confidence.

The ECB has been below the radar over the past few weeks, overshadowed by the Federal Reserve. Policymakers at the Fed have shown a significantly more dovish stance since the December policy meeting, which has weighed on the U.S. dollar while sending the stock markets higher. The ECB terminated its massive stimulus package in December, and a natural follow-up move would be a modest hike in interest rates – if the eurozone economy was performing well. That hasn’t been the case, as the economy slowed in the third quarter and all signs are Q4 will also be soft. Analysts had predicted a rate hike in the third quarter, but sluggish economic activity has pushed off that forecast until the fourth quarter. The markets are keeping a close eye on the ECB policy meeting on Thursday, looking for clues with regard to future rate policy.

The markets were treated to disappointing news on Monday, with the release of Chinese data. The number 2 economy in the world grew 6.6% in 2018, marking its lowest level since 1990. GDP for the fourth quarter dipped to 6.4%, compared to 6.5% in the previous quarter. The soft GDP release comes on the heels of soft trade and manufacturing data, pointing to a slowdown due to the ongoing U.S-China trade war. The Trump administration has threatened further tariffs if a deal is not reached by March 1, but a second round of negotiations between the sides is scheduled for the end of the month in Washington. Chinese officials will be under pressure to show more flexibility in the talks, in order to stem the economic bleeding.

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