Ella 
EUR/USD rose to recent highs above 1.0930 on Wednesday after a surprise rise in European manufacturing PMIs and better-than-expected U.S. PMIs dampened sentiment, sending EUR/USD lower as investors Momentum on the day second-guessed the market and favored the safe-haven US dollar (USD), albeit modestly.
On Wednesday, the manufacturing purchasing managers’ index (HCOB PMI) of various euro zone economies was mixed. Investors chose to focus on the euro zone manufacturing purchasing managers’ index (PMI) in January. The index rose to 46.6 from 44.4 in December, higher than The expected value is 44.8. The services PMI fell to 48.4 from the previous reading of 48.8, completely missing expectations of 49.0.
Although the EU Manufacturing Purchasing Managers Index (PMI) is still below the 50.0 line and in the contraction range, investors are convinced of the optimism of the manufacturing data, and the EUR/USD rebounded.
The U.S. S&P Global Purchasing Managers Index (PMI) was generally higher than expected as the U.S. economy continues to outperform forecast models. The Manufacturing Purchasing Managers’ Index (PMI) climbed to 50.3 in January, a new high in 11 months. It returned to the expansion range above 50.0 for the second time in four months, easily exceeding expectations of being the same as the 47.9 recorded in December. .
The U.S. Services Purchasing Managers Index (PMI) also beat expectations, recording 52.9, while the forecast fell back to 51.0 from the previous reading of 51.4. With the U.S. Purchasing Managers Index significantly better than expected, investors’ hopes for an interest rate cut have been dampened again, as the strong U.S. economy makes it unlikely that the Federal Reserve (Fed) will panic and start cutting interest rates earlier than expected. Bets on the Fed cutting interest rates in March are now below 40%, down from about 80% a month ago, according to the CME FedWatch tool.
On Thursday, the European Central Bank (ECB) will announce its interest rate decision and monetary policy statement again. The market will pay close attention to whether the ECB will release a hawkish stance or continue its dovish stance. Previously, ECB policymakers have made frequent speeches in recent days to Reduce market expectations for an early interest rate cut by the European Central Bank before the summer.
The trading week will end with the U.S. Personal Consumption Expenditures (PCE) price index released on Friday. The PCE price index in December is expected to rise from 0.1% to 0.2% on a monthly basis and fall to 0.2% on an annual basis.
