EUR/USD: German ZEW to provide a leg up ahead of FOMC?

• The Euro is holding upright ahead of the Fed's rate increase on Wednesday.
• German ZEW inbound for the Tuesday session ahead of Fed risk event.

The EUR/USD is trading lightly in Asia markets following a push upwards in Monday's risk-on markets. The pair is testing the waters around 1.2345 ahead of a hectic Tuesday session.

Trade wars and tariffs

The Euro is being kept afloat despite the diverging policy between the European Union (EU) and the US. The US Fed is slated to lift interest rates for the 6th time since December of 2015, with markets widely pricing in a 25 bps increase to 1.75%. However, the US Dollar is struggling to further capitalize on the upward pressure thus far. Ongoing fears of a full-blown trade war between the US and China on Trump's planned tariffs on Chinese goods continue to take the wind out of risk appetite's sails, on top of tensions between the US and Europe over tariffs on foreign steel and aluminum heading over the US border. The steel and aluminum tariffs are set to take effect on March 23rd, while the tariffs specifically targeting China are planned to be unveiled by this Friday.

German ZEW for Tuesday

Before the Fed introduces a rate increase on Tuesday, the EUR/USD will be seeing Germany's ZEW surveys at 10:00 GMT today. Economic activity within the EU has slowed somewhat for the first quarter of 2018, and this contraction is expected to be reflected in the ZEW Current Situation Survey for March, with analysts expecting the survey to return a 90.0 reading compared to the previous period's 92.3, while the ZEW Economic Sentiment index for March is expected at 13.0, under the previous month's reading of 17.8. 

EUR/USD Levels to watch

The Euro has been increasingly constrained against the US Dollar, but USD bulls have refused to go down quietly, and the pair has failed to make any serious headway in either direction. Intraday support is found at Monday's swing high of 1.2325 with resistance close by, near Monday's high at 1.2360. A break lower will see further support at the week's low of 1.2260, while a bullish push will see resistance from March's high of 1.2445.