On the horizon
On Wednesday, EUR/USD could be impacted by Eurozone inflation data when the Harmonized Index of Consumer Prices (HICP) and the Unemployment Rate are released at 09:00 GMT. If HICP inflation is shown to have cooled considerably then it could weaken the pair as it will increase the chances of an even earlier interest-rate cut from the ECB, raising even the possibility of a cut in April.
German inflation data, which came out on Tuesday, ticked lower to 2.2% YoY in line with expectations and below the 2.5% in February. The German Harmonized Index of Consumer Prices, however, fell short of expectations at 2.3%, suggesting a risk of a similar weakness for Eurozone-wide HICP.
In the US the main data release on Wednesday will probably be ADP Employment Change at 12:15 GMT, seconded by the final S&P Global Services PMI and the ISM Services PMI. Services inflation is seen as one of the stickiest components in the CPI basket so markets may pay extra attention if the real figure diverges from expectations.
More Fedspeak is also in the offing with Fed's Bowman, Goolsbee, Barr, Kugler, and Powell all due to speak.
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