The euro returned to trading back around the flatline, oscillating up and down on Tuesday as the European calendar offers no relevant data, while traders are focused on the US session and retail sales in particular amid the start of the FOMC meeting.
Forex – EUR/USD: Euro Erases Gains in Choppy Morning Trade
Frankfurt – The euro oscillated between slight gains and losses near the $1.11 handle on Tuesday, as the dollar chalked up broad-based but modest gains on expectations for a more positive Federal Reserve (Fed) meeting, which starts today.
The euro edged back below the $1.11 handle, up 0.01% to $1.1098 during the European morning session.
EUR traders will have to wait for the US session for more drivers for the pair, as the European calendar is pretty empty today.
The latest two day Federal Open Market Committee (FOMC) meeting gets underway in Washington this afternoon, with US policymakers meeting to review the economy and monetary policy in the context of recent market volatility and the latest economic data.
Moreover US data will also come into focus, including retail sales data for February, the most important data point today, with expectations of a decline of -0.1%, after three successive months of modest gains.
The attention will also turn to the Empire State Manufacturing Index. Recent data has shown that only US manufacturing has been under pressure and the March reading of factory activity in the New York area isn’t expected to offer much optimism, apart from a slight improvement on February’s -16.6, to -10.3, marking the eighth consecutive monthly contraction.
China’s central bank weakened the CNY by 166 points, which has taken some of the wind out of the markets’ sails. However, there is a growing opinion that central banks might have reached a tacit agreement at the recent G20 meeting.
“We have seen the ECB move away from targeting the EUR, to one of reflation through traditional channels (i.e. the banking system), and there is a belief that if other central banks help keep the USD from rallying then China will not have to devalue and global financial conditions can continue to improve,” Chris Weston from IG wrote in a research note on Tuesday.