Anna 
Monday is poised to bring insight into the current economic sentiment in the eurozone with the forthcoming release of Purchasing Managers’ Index (PMI) reports. Forecasts anticipate improvements in both the manufacturing and services sectors, albeit with manufacturing expected to remain below the expansion threshold. Conversely, the services sector is projected to continue growing, contributing to overall economic optimism in the region.
The euro has experienced a slight uptick, reflecting positive domestic growth prospects. However, the future trajectory of the euro hinges not only on the PMI outcomes but also on the European Central Bank’s (ECB) response to these indicators. The ECB’s approach to monetary easing, particularly following the anticipated June rate cut, will be critical. Despite this significance, recent market pricing for the ECB has shown minimal volatility.
Some consider the euro’s rally to 1.09 as somewhat excessive, given ongoing concerns regarding the US disinflation narrative. A consolidation within the range of 1.08-1.09 is deemed more likely than a significant surge above these levels. Nonetheless, the market has displayed sensitivity to economic indicators, with reactions, albeit temporary, observed following various data releases.
There remains the possibility of the euro reaching or slightly exceeding the 1.0900-1.0950 range, particularly if eurozone PMI data outperforms that of the United States. The forthcoming PMI reports and ECB President Christine Lagarde’s speeches this week are eagerly anticipated events that could influence the euro’s valuation and the ECB’s monetary policy decisions.
