The EUR/USD pair tries to advance above 1.0850. Société Générale economists analyze the pair's prospects.
EUR/USD advance may depend on ISM and NFP services PMI
The slowdown in US job growth on Friday may outweigh Powell's testimony and the ECB's decision and could give EUR/USD another chance to go for 1.0900.
The Dollar's bullish momentum stalled last week and another profit-taking could occur if the ISM Services PMI and/or NFP report falls short of expectations. This would end the Fed rally that has ruled currencies and EUR/USD since the beginning of the year.
As for the ECB, there will be no monetary policy changes on Thursday, but the dominant issue is the new inflation forecast. If the forecasts are revised downwards and the ECB is reassured by the fourth quarter turning point in wage growth, it would reinforce the market's conviction that a first rate cut could occur in June and precede a first reduction in the US. This could take the shine off the recent rises in EUR/CHF and EUR/JPY and slow EUR/GBP's rebound from February lows.
Source: Fx Street
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