EUR/USD has posted gains in the Tuesday session. Currently, the pair is trading at 1.1277, up 0.28% on the day. On the release front, there are no German or eurozone events. In the U.S., consumer inflation is expected to remain soft, with CPI and Core CPI projected at 0.2%. On Wednesday, the eurozone releases industrial production and the U.S. publishes PPI and durable goods orders data.
The euro dropped sharply following the ECB’s dovish rate statement last week, but has since recovered most of those losses. Investor sentiment towards the U.S. dollar has slipped after a dismal nonfarm payroll report on Friday. The U.S. economy managed to create only 20,000 jobs in February, nowhere near the forecast of 180 thousand. If consumer inflation numbers miss expectations, the euro could continue to gain ground. Inflation in the U.S. remains well below the Federal Reserve target of 2.0%, and is a key reason why the Fed can afford to stay dovish and maintain interest rate levels.
The German manufacturing sector continues to post dismal numbers. Industrial production fell 0.8% in January, missing expectations. The indicator managed only two gains in the second half of 2018 and has started 2019 with a decline. Last week, factory orders plunged 2.6%, marking a third successive decline. The U.S-China trade war has dampened global growth, which has reduced the demand for German exports and weighed heavily on manufacturing activity. Eurozone manufacturing has also struggled, and the negative trend is likely to continue if there is no breakthrough in the U.S-China trade talks.
