EUR/USD remains above 1.0800 ahead of Eurozone PMI
- EUR/USD holds its position ahead of the releases of PMI data from the Eurozone and Germany.
- Eurozone Manufacturing Services PMIs are expected to tick upwards slightly in May.
- US Manufacturing and Services PMIs are expected to hold steady at 50.0 and 51.3, respectively.
EUR/USD treads water to halt its three-day losing streak, hovering around 1.0820 during the Asian session on Thursday. The Euro's appreciation against the US Dollar (USD) can be attributed to a corrective move for the latter. Investors are likely to await Purchasing Managers Index (PMI) data from both the Eurozone and Germany, with subsequent attention turning to the US PMI later in the North American session on Thursday.
Projections suggest that Eurozone Manufacturing PMI in May is anticipated to rise to 46.2 from 45.7, while the Services PMI is expected to show a slight uptick to 53.5 from 53.3. Meanwhile, in the United States (US), both Manufacturing and Services PMIs are expected to remain unchanged at 50.0 and 51.3, respectively.
The Euro could face challenges ahead as the European Central Bank (ECB) is expected to consider reducing borrowing costs in its June meeting. This anticipation stems from the current inflation rate in the Euro Area, which stands at 2.4%, very close to the ECB's target of 2.0%. President Christine Lagarde recently indicated a high probability of such action in June if data continues to support the confidence that inflation will eventually align with the ECB's target in the medium term.
On Wednesday, the US Dollar (USD) strengthened as the minutes from the latest Federal Open Market Committee (FOMC) policy meeting indicated hawkish sentiment surrounding the Federal Reserve (Fed) policy stance. Fed policymakers expressed concerns about the lack of progress on inflation, which has proven to be more persistent than expected at the start of 2024. As a result, the Fed is hesitant to proceed with interest rate cuts.