EUR/USD is showing little movement in the Tuesday session. Currently, the pair is trading at 1.1274, up 0.12% on the day. In economic news, there are no German or Eurozone events. In the U.S., the sole event is JOLTS Jobs Openings, which is expected to drop to 7.54 million. Wednesday promises to be busy. The ECB will set its monthly interest rate and release a policy statement. The U.S. will release key inflation data. CPI is expected to improve to 0.3% and Core CPI is projected to climb to 0.2%. As well, the FOMC releases the minutes of the March policy meeting.
The focus will be on central bankers on Wednesday, with key events at the ECB and the Federal Reserve. The ECB is expected to maintain interest rates at a flat 0.00%, where they have been pegged since March of 2016. Investors will be more interested in the rate statement, as a dovish message to the markets could push the euro lower. ECB policymakers have acknowledged the slowdown which has gripped Germany and the eurozone. The manufacturing sector has been particularly hard hit, as a slump in global demand has hurt exports, such as German cars and auto parts. Last week, the ECB minutes from the March meeting were pessimistic, as policymakers acknowledged that the economic outlook remained bleak. If the rate statement is a repeat performance, the euro is likely to point downward.
Investors will have to quickly shift focus from the ECB to the Federal Reserve, which releases the minutes of the March meeting. At the meeting, the Fed said it would start tapering the reduction of its balance sheet in May. This marks a loosening of policy, and comes in response to weaker economic data out of the U.S. in recent months. The minutes should be treated as a market-mover, and a dovish tone could sour investors and send the dollar lower.
