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Early on Tuesday, the EUR/USD pair moved above 1.0800 and tested the 1.0840 zone. A widespread sell-off of US dollars supports the Euro. Markets are awaiting EU PMIs and Fed meeting minutes.
Tuesday saw the EUR/USD pair reach a two-week high just shy of 1.0840 as the dollar widely declined. However, the dollar later recovered in the US trading day as American markets resumed their regular course after an extended weekend. For the first time in a week, EUR/USD recovered the 1.0800 handle as the pair struggles to ignite a bullish comeback.
The markets are anticipating the release of the Federal Reserve’s most recent meeting minutes, or FOMC minutes. In anticipation of the euro area Purchasing Managers Index (PMI) data that are expected on Thursday, European markets are likewise bracing themselves. As traders await the Fed’s most recent meeting minutes, broad market flows control the EUR/USD exchange rate. Investors are still hoping for the FOMC to drop rates more quickly.
Money markets are factoring in a first rate decrease of at least 25 basis points in June, per the CME’s FedWatch Tool. Despite the Fed’s own projections of three rate cuts in 2024, the markets still anticipate five.
The pan-European economy is struggling with slow growth and a softening environment, so expectations for Thursday’s European PMIs were generally positive but they are still in contraction zone.
Germany’s HCOB Composite PMI for February was predicted to rise from 47.0 in January to 47.5 in February. It is predicted that the broader HCOB Composite PMI for the Eurozone would increase to 48.5 from 47.9 in February.
It is expected that Europe’s final Harmonized Index of Consumer Prices (HICP) for the January-ended year will confirm the initial reading of 3.3% YoY. On Thursday, the US PMIs are scheduled to be released; nevertheless, it is expected that they will show a dip, with the Services component predicted to drop to 52.0 from 52.5 and the Manufacturing component to slightly drop to 50.5 from 50.7.
