EUR/USD is almost unchanged in the Monday session, after showing little movement on Tuesday. Currently, the pair is trading at 1.1308, down 0.02% on the day. In economic news, German ZEW economic sentiment improved slightly to -13.4, beating of the estimate of -14.1 points. The all-eurozone release followed the same trend, improving to -16.6, which was above the forecast of -18.2 points. There are no major events out of the United States. On Wednesday, the FOMC releases the minutes of its January policy meeting.
The ZEW economic sentiment surveys remains mired in deep freeze, as investors and analysts are pessimistic about the economic outlook in Germany and the eurozone. There is a silver lining in the German release, as the readings have improved steadily over the past four months – back in October, the score was -24.7 points. In the first quarter of 2018, the readings were in positive territory, as the German economy was performing well. However, optimism then dissipated, as the global trade war intensified and the German economy slowed. It has been a similar story with the eurozone, as ZEW economic sentiment scores have been in negative territory since the second half of 2018.
Traders should treat the Federal Reserve minutes as a market-mover. Since raising rates in December, the Fed has changed direction and become much more dovish. In late 2018, there was talk of up to four rate hikes in 2019, but the Fed has revised its forecast to two hikes. The markets have gone further, projecting no rate increases this year, and there has even been talk of a rate cut in late 2019. In the January rate statement, the Fed discarded previous pledges of “further gradual increases” in interest rates, and said it would be “patient” before any further hikes.
