EUR/USD is showing little movement in the Wednesday session. Currently, the pair is trading at 1.1884, up 0.27% on the day. In economic news, German and French banks are closed for a holiday. ECB releases an economic bulletin, and the US will publish consumer inflation reports. CPI is expected to rebound with a gain of 0.3%, while Core CPI is expected to remain unchanged at 0.2%. On Friday, ECB President Mario Draghi will speak at an event in Florence and the US releases UoM Consumer Sentiment.
The currency markets have not shown much interest in President Trump’s dramatic speech on Tuesday. Trump announced that the US would withdraw from the Iran nuclear deal. Trump blasted the agreement and said that the US would impose stiff sanctions on Iran. However, Britain, France and Germany have said they plan to remain in the deal, and will be holding a high-level meeting with Iranian leaders on how the agreement can be salvaged. With the US acknowledging that the White House does not have a ‘Plan B’, it’s unclear what happens next. Meanwhile, tensions between Israel and Iran are at a fever pitch after Israel struck dozens of military targets in Syria on Tuesday.
The ECB continues to send a message of cautious optimism to the markets, and this was underscored by the ECB Economic Bulletin. The report stated that the eurozone economy continues to show “solid and broad-based expansion” but did acknowledge that growth in the first quarter slowed. As for inflation, policymakers remain confident that inflation will continue to move towards the inflation target of 2 percent. However, inflation remains subdued and has not shown signs of an upward trend. The report reaffirmed that the ECB plans to maintain interest rates at current levels for an “extended period of time, and well past the horizon of the net asset purchases.”
