Investing.com — The release of the Purchasing Managers' Index (PMI) report scheduled for Monday is expected to shed light on current economic growth sentiment in the euro area. Manufacturing and services are both projected to show signs of improvement, but manufacturing is expected to remain below the expansion threshold. Meanwhile, the services sector is likely to show further growth, contributing to economic optimism in the region.
The value of the euro rose slightly, influenced by the positive domestic growth outlook. However, the future trajectory of the euro depends not only on the PMI results, but also on the European Central Bank's (ECB) response to these indicators. The ECB's approach to accommodative monetary policy, especially after the anticipated June interest rate cut, will be crucial. Nevertheless, the recent market price of the ECB has shown minimal fluctuations.
Some believe that a rise in the euro to 1.09 is somewhat excessive given continued concerns about the US disinflation story. A consolidation in the 1.08-1.09 range is considered more likely than a significant rally above these levels. Nevertheless, markets have reacted to various data releases, showing sensitivity to economic indicators, albeit in temporary reactions.
We cannot rule out the possibility of the euro reaching or even slightly above the 1.0900-1.0950 range, especially if the Eurozone PMI data outperforms that of the US. The PMI report and two speeches by European Central Bank (ECB) President Christine Lagarde this week are highly anticipated events that could impact the value of the euro and the ECB's monetary policy decisions.
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