EUR/USD – Euro Posts Small Losses, ECB Policy Statement Next

EUR/USD has posted slight losses in the Wednesday session, erasing the gains seen on Tuesday. Currently, the pair is trading at 1.2212, down 0.17% on the day. It’s a quiet day on the release front, as the sole event is Crude Oil Inventories. On Thursday, the ECB will set interest rates, while the US releases durable goods orders and unemployment claims.

What can we expect from the ECB policy statement on Thursday? Eurozone indicators have softened in recent weeks, raising concerns that ECB President Mario Draghi could sound dovish about the eurozone economy. This could weigh on the euro. At the March meeting, policymakers took a small step, dropping a pledge to increase stimulus if needed. Will we see additional ‘baby’ steps at the April meeting? The ECB has said it intends to continue bond purchases until at least September, to keep interest rates at current levels until “well past” the end of the program. Traders shouldn’t expect any dramatic moves at the policy meeting, as the bank will likely continue to preach patience and prudence.

Is the German locomotive in trouble? German business confidence took a hit in April, as Ifo Business Climate fell to 102.1 points, down from 114.7 points a month earlier. This marks the lowest level since November 2012. German key indicators have softened recently, pointing to a slowdown in economic conditions in the first quarter. We’ll get a look at the mood of consumers, with the release of German GfK Consumer Climate on Thursday.

The trade battle between China and the US has become a geopolitical hotspot, dominating the headlines and shaken global markets. After a series of tit-for-tat tariffs between the economic giants, there has been widespread concern that these moves could lead to a trade war which would slow down Chinese growth and trigger a global recession. However, US Treasury Secretary Steven Mnuchin sought to lower the rhetoric on the weekend, saying that he was considering a trip to China, adding he was “cautiously optimistic” that the two sides could resolve the trade dispute. The markets will be hoping for a truce between the sides, as any further tariffs could rattle the markets.

EUR/USD Fundamentals

Wednesday (April 25)

• 10:30 US Crude Oil Inventories. Estimate -1.6M

Thursday (April 26)

• 2:00 German GfK Consumer Climate. Estimate 10.9

• 7:45 ECB Minimum Rate. Estimate 0.00%

• 8:30 ECB Press Conference

• 8:30 US Core Durable Goods Orders. Estimate 0.5%

• 8:30 US Durable Goods Orders. Estimate 1.6%

• 8:30 US Unemployment Claims. Estimate 230K

EUR/USD Technical

EUR/USD edged lower in the Asian session. In European trade, the pair lost ground but has recovered most of these losses

• 1.2092 is providing support

• 1.2235 was tested earlier in resistance and is a weak line

Further levels in both directions:

• Below: 1.2092, 1.2025 and 1.1916

• Above: 1.2235, 1.2319, 1.2460 and 1.2581

• Current range: 1.2092 to 1.2235