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EUR/USD stopped a three-day losing streak and was hovering around 1.0820 during the Asian session on Thursday. EUR/USD’s appreciation can be attributed to the latter’s corrective moves. Investors are likely awaiting purchasing managers’ index (PMI) data from the euro zone and Germany, before attention will turn to U.S. PMIs later in the North American session on Thursday.
Forecasts show that the euro zone’s manufacturing purchasing managers’ index in May is expected to rise from 45.7 to 46.2, and the services purchasing managers’ index is expected to rise slightly from 53.3 to 53.5. Meanwhile, U.S. manufacturing and services PMIs are expected to remain unchanged at 50.0 and 51.3 respectively.
The euro may face challenges ahead as the European Central Bank (ECB) is expected to consider lowering borrowing costs at its June meeting. This expectation stems from the current inflation rate in the euro area of 2.4%, which is very close to the European Central Bank’s 2.0% target. ECB President Christine Lagarde recently said that such action in June was likely if data continued to support confidence that inflation would eventually be consistent with the ECB’s target over the medium term. big.
The U.S. dollar (USD) strengthened on Wednesday as minutes from the latest Federal Open Market Committee (FOMC) policy meeting showed that the Federal Reserve’s (FED) policy stance was hawkish. Fed policymakers have expressed concern about the lack of progress on inflation, which is proving more persistent than expected in early 2024. As a result, the Fed is hesitant to continue cutting interest rates.
