- The Euro recovery stalls below 1.0700 and is dangerously close to the low of 1.0610.
- The combination of the Fed's “higher rates for longer” with the ECB's easing hopes is weighing on the Euro.
- This week, the US GDP and PCE price index figures could give a new boost to the Dollar.
Euro bears remain in control on Monday, as the pair oscillates in no clear direction, with bullish attempts limited below 1.0700. This is former support turned resistance and keeps the five-month low of 1.0610 dangerously close.
The economic calendar has been light today, but the unexpected deterioration of the Eurozone consumer confidence index has not helped to increase demand for the Euro. On Tuesday, HCOB's preliminary manufacturing and services PMI could set the direction of the pair in the near term.
An hawkish Fed and a dovish ECB weigh on the pair
In the medium term, the Euro is expected to remain on the defensive amid divergent monetary policy outlooks from the Fed and ECB. The latest data has reinforced the US “no landing” view, forcing the Federal Reserve to delay and scale back its 2024 easing plans.
The ECB, on the other hand, has hinted at a rate cut in June. This would put the bank among the first of the major central banks to begin to roll back its tightening cycle, which will likely keep euro buyers at bay.
In the United States, first quarter GDP data, to be published on Thursday, and the price index PCE Friday will be key to understanding the Fed's monetary policy plans. The publication of a new batch of strong data is likely to boost the Dollar and cause the Euro to explore new lows so far this year below 1.0600.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
