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EUR/USD – CPI and FOMC minutes muted by growing geopolitical tensions – Analysis for April 12th 2018

Although we’ve seen some important releases yesterday, the EUR/USD pair wasn’t strongly impacted. The market reaction was limited, as the developments were muted by growing geopolitical tension related to Syria. Support is set at 1.23, resistance at 1.24.

Commentary:

Due to the release of consumer price index and the FOMC meeting minutes, the market’s were focused mostly on the dollar yesterday. Investors were looking for hints on the timeline of the next rate hike and clues on the number of hikes. The minutes failed to deliver such information, but Fed members agreed that the inflation is heading towards the target set by the central bank. This belief was backed up by the CPI reading. Consumer price index has slightly dropped m/m, coming at -0.1%, but y/y came along with the expectations at 2.4%.

The dollar was unable to find support on the back of the releases, as the markets turned their focus to geopolitical tensions once again. Fears of a potential trade war between the U.S. and China wavered after Chinese President Xi Jinping said that China is ready to open up its economy by lowering import tariffs on some goods on Tuesday. Unfortunately for the dollar, new tensions arised as Donald Trump tweeted that the United States are ready to fire at Syria, increasing the tension between the U.S. and Russia.

Today’s releases:

  • 11:00 Euro zone – Industrial production
  • 13:30 Euro zone – Account of the EBC meeting
  • 14:30 USA – Import/export index

Analysis:

Pic.1. EUR/USD chart.

The CPI and FOMC meeting minutes release haven’t influenced the EUR/USD pair in a significant manner as it sits comfortably in its current range. Today the markets will probably focus on the numbers and infomation from Europe. Strong reading of industrial production numbers could support the common currency.

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