European economic data will make headlines on Tuesday, as traders await the US Federal Reserve’s latest policy decision. Currency markets could see an active session in Europe as UK, Germany and Eurozone data are released.

Action begins at 06:45 GMT with SECO’s economic forecasts for the Swiss economy. The projections cover the country’s main GDP components.

Attention quickly shifts to Germany at 07:00 GMT with a report on producer inflation. Germany’s producer price index (PPI) is projected to rise 0.1% in February, which translates into an annualized gain of 2%.

In a separate report, the Swiss government will report its latest trade balance for the month of February. Bern’s surplus is expected to shrink significantly during the month.

The United Kingdom’s Office for National Statistics will unveil a deluge of inflation numbers beginning at 09:30 GMT. This includes data on retail prices, producer prices and consumer inflation. The consumer price index (CPI) is expected to ease to 2.5% annually in February, down from 2.7%. Producer prices are expected to fall to 2.7% from 2.8%.

The Centre for European Economic Research (ZEW) will release a pair of sentiment indicators gauging institutional investor confidence in the German and Eurozone economies. The German economic sentiment indicator is projected to fall to 13.0 in March from 17.8 the previous month. The euro area figure is forecast to fall to 28.1 from 29.3.

In the United States, the only data release of note is the American Petroleum Institute’s weekly crude inventory report. The data set is considered a precursor to the official numbers the following morning.

The Federal Open Market Committee (FOMC) will kick off its two-day policy meeting on Tuesday, with a rate announcement expected the following afternoon. The US central bank is widely expected to hike interest rates for the first time since December.

EUR/USD

Europe’s common currency regained some of its poise Monday, as prices rallied back to the mid-1.2300 region. At the moment, the EUR/USD is eyeing immediate resistance targets at 1.2414, which corresponds with the high from 14 March.

GBP/USD

Cable could get a lot of attention Tuesday as traders react to British inflation numbers. GBP/USD jumped to three-week highs at the start of the week after the UK and EU agreed on a transition deal. The pair is currently trading at 1.4036, with the bulls eyeing a test of the 1.4100 level.

USD/CAD

The USD/CAD lost some of its luster on Monday, but losses were generally well contained despite the greenback’s loss of momentum across the board. The pair was last down 0.1% to trade at 1.3068. The outlook remains generally favourable as the Fed continues to hike rates while the Bank of Canada attempts to talk down the loonie to reposition its national trade picture.