EUR/USD is on a tear, as the currency trades just under the 1.39 line on Friday. The euro has gained close to 200 points this week against the sagging US dollar. The greenback failed to make a dent in the euro rally despite an excellent reading from US Unemployment Claims. On Friday, German inflation indicators were weak but met expectations. Later in the day, ECB head Mario Draghi holds a press conference in Washington. Today's US highlights are the Producer Price Index and UoM Consumer Sentiment.
The Federal Reserve minutes were eagerly awaited by the markets, but didn't deliver much in the way of breaking news. Policymakers expressed concern about speculation over a possible rise in interest rates, but didn't say when the central bank might change its current monetary policy. Under its QE program, the Fed is purchasing $55 billion in assets every month. There have been three tapers to QE so far, and the Fed chair Janet Yellen has said that the Fed plans to wind up QE late in the year. However, if there are any setbacks on the inflation or employment fronts, the Fed could be forced to delay further tapers. As the tapers are dollar-positive, any delay would be bearish for the greenback.
Tensions between the US and Russia continue to worsen over the Ukraine. On Monday, pro-Russian demonstrators took over a government building in an industrial city in the east of the country and declared their independence. Russia has warned the Ukraine not to react with force, while the US has accused Russia of continuing to foment unrest in the Ukraine ahead of elections in May. With the country split down the middle between pro-Western and pro-Russian camps, we could see the turmoil continue.
EUR/USD 1.3892 H: 1.3905 L: 1.3886
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