EUR/USD has posted small gains in the Tuesday session. Currently, the pair is trading at 1.1703, up 0.22% on the day. On the release front, there are no key eurozone indicators. In the U.S, the key indicator is CB Consumer Confidence, which is expected to drop to 126.6 points. On Wednesday, Germany releases GfK Consumer Climate and France publishes consumer spending and Preliminary GDP. The US releases Preliminary GDP and Pending Home Sales.
The euro has been moving higher since Friday, gaining 1.4% against the dollar. Earlier on Tuesday, EUR/USD punched above the 1.17 line for the first time since August 1. The euro gained ground on Monday, responding to an unexpectedly strong business confidence report in Germany. The Ifo Business Climate report improved to 103.8, easily beating the estimate of 101.9 points. This marked the first time this year that business confidence has improved, thanks to a strong German economy and a pause in the global trade war.
Escalating trade tensions and tit-for-tit tariffs between the United States and its trading partners have shaken the markets since June. There was some good news in this regard on Monday, with the announcement that the U.S and Mexico have agreed to a new trade deal. Under the agreement, 75% of automobile content must be manufactured in North America, up from NAFTA’s current level of 62.5%. Trump has left the door open for Canada to join the new trade deal, but says he is also open to a separate trade agreement with Canada. The announcement of the new trade deal has improved risk appetite and pushed the U.S dollar lower.
