EUR/USD hit its lowest level in more than a month on Tuesday, near 1.0820. The economists of ING They analyze the pair's prospects.
A new test of PMI
We think the dollar rose too much on Tuesday and there is room for EUR/USD to break above 1.0900 before the European Central Bank announcement on Thursday.
At the same time, much of the pair's evolution will depend on the PMI indices. The French and German figures will be published before the Eurozone-wide figures. Expectations are moderately optimistic, with Eurozone composite PMIs expected to rise from 47.6 to 48.0, driven by marginal increases in both services and manufacturing.
PMIs are often evaluated in comparison to other countries. In the case of the Eurozone, compared to the United States and the United Kingdom. The consensus for UK PMIs is a flat reading of 52.1 (composite). Barring a material surprise in the Eurozone data, the persistent divergence between contractionary (eurozone) and expansionary (United Kingdom) PMIs will maintain the pressure on EUR/GBP.
Source: Fx Street
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