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The minutes of the latest ECB minutes are up for release this week, but could this really push the shared currency in a strong direction? Or will sentiment still be king?

ECB minutes (Apr. 12, 12:30 pm GMT)

The central bank is due to publish the transcript of their latest monetary policy huddle this week, which could be a fresh opportunity for the euro to trade on fundamentals once more.

Keep in mind, though, that the March statement was considered a disappointment because it lacked tightening hints that bulls were hoping to hear. The previous minutes also failed to push the shared currency in a particular direction despite a higher knee-jerk reaction since it didn’t reveal anything new.

Analysts continue to expect caution surrounding euro strength and its impact on price levels, so a neutral tone could still usher in some weakness.

Overall risk sentiment

Apart from those, the trade spat between China and the U.S. could still impact risk-taking, which suggests that the euro and franc could be sensitive to risk-related flows of its counterparts.

Specifically, watch out for their next steps after announcing their tariff plans. If one of them decides to push the button and actually implement them, or if they find even more products to tax, both currencies could bank on their safe-haven appeal to advance against commodity currencies.

Last Week’s Price Review

The Euro

The euro is the third worst-performing currency of the week (as of 1 pm GMT) and is behind only the yen and the Swissy.

Overlay of EUR Pairs: 1-Hour Forex Chart
Overlay of EUR Pairs: 1-Hour Forex Chart

Despite the poor ranking this week, price action on the euro wasn’t exactly all that uniform. In fact, there were instance when euro pairs were clearly diverging, which implies that the euro was taking its marching orders from its peers.

The euro did appear to broadly weaken against its peers (except against CHF and JPY) on Tuesday after a bunch of disappointing Euro Zone manufacturing PMI reports were released.

However, most of these manufacturing PMI reports were for the revised readings, not the flash estimate, and are therefore considered low-tier items.

Moreover, it’s still likely that price action on euro pairs was driven by opposing currencies since risk appetite was showing signs of returning at the time as trade war jitters eased, which boosted the comdolls and the dollar while dampening demand for the safe-havens yen and Swissy. The pound, meanwhile, had it’s better-than-expected manufacturing PMI.

Moving on, the Euro Zone’s inflation report was released on Wednesday. And as noted in Wednesday’s London session recap, that report was mixed but the headline reading and core readings were still evolving within the ECB’s projection, so they were actually net positive.

However, that didn’t really have a uniform (and positive) effect on the euro’s price action. Instead, we saw the battle lines divided between safe-havens and the more-or-less higher-yielding currencies as risk aversion initially made a comeback on Wednesday, especially after China announced that they’ll reciprocate Trump’s tariffs by slapping tariffs on 106 U.S. goods to tune of $50 billion.

Risk appetite later got revived during the latter half Wednesday when fears of a full-scale trade war began to fade after Trump tweeted that “We are not in a trade war with China” and the Chinese ambassador to the U.S. said that “Negotiation would still be our preference but it takes two to tango.”

And once again, we can see the battle lines were divided between safe-havens and the more-or-less higher-yielding currencies, which reinforces the idea that the euro was a victim of opposing currency price action this week.

After that, price action on the euro became a chaotic mess, which once again implies that the euro was being kicked around by its peers.

The Swiss Franc

The Swissy is a net loser yet again this week. It wasn’t at the very bottom of the forex heap, though, since the Swissy was able to maintain its lead against the yen.

Overlay of CHF Pairs: 1-Hour Forex Chart
Overlay of CHF Pairs: 1-Hour Forex Chart

But are the euro and the Swissy still dancing in tandem? Well, that does still seem to be the case. The Swissy initially tracked the euro rather closely. However, the Swissy was apparently more affected by the returning risk-on vibes on Wednesday and Thursday since the Swissy began to lag behind the euro then.

NZD/CHF (inverted, red) vs.  EUR/NZD (black): 1-Hour Forex Chart
NZD/CHF (inverted, red) vs.  EUR/NZD (black): 1-Hour Forex Chart
CHF/JPY (red) vs.  EUR/JPY (black): 1-Hour Forex Chart
CHF/JPY (red) vs.  EUR/JPY (black): 1-Hour Forex Chart
USD/CHF (inverted, red) vs.  EUR/USD (black): 1-Hour Forex Chart
USD/CHF (inverted, red) vs.  EUR/USD (black): 1-Hour Forex Chart