EUR/USD continues to climb this week, as the pair has gained close to 1.0 percent. Currently, the pair is trading at 1.1236, up 0.18%. The pair is currently at its highest level since April 23. German banks are closed for the May Day holiday, so the pair is unlikely to show much movement on Wednesday. In economic news, there are no German or eurozone events. In the U.S., all eyes are on the Federal Reserve, which releases its rate statement. The U.S. will release ADP nonfarm payrolls, which is expected to jump to 181 thousand, after a weak reading of 129 thousand in the previous release. As well, the ISM Manufacturing PMI is expected to drop to 55.0 points. On Thursday, Germany releases manufacturing PMI and retail sales, while the U.S. posts unemployment claims.
Will the Federal Reserve rain on the euro party? Rate-makers are expected to sit on the sidelines and keep rates at a range between 2.25-2.50 percent. Investors will be focused on the rate statement, looking for clues regarding the next rate move. The Federal Reserve has said it expects to hold interest rate levels for the rest of the year, and the most recent inflation numbers will reinforce that stance, as the Fed target of 2.0% remains elusive. The Core PCE Price Index, which is the Federal Reserve’s preferred gauge for inflation, came in at 0.0% in March and 0.1% in February (the two events were released on Tuesday due to the government shutdown earlier this year). On an annualized basis, the indicator gained 1.6%, just shy of the estimate of 1.7%. GDP and consumer spending are looking bright, but nonetheless there is no danger of the economy overheating, so the Fed can afford to leave rates at the current level for the near future.
