The euro is trading near one-month lows against the dollar, around $1.175, despite positive eurozone PMI data. The dollar is supported by hawkish Federal Reserve signals, resilient US economic figures, and geopolitical tensions. Market participants are closely watching PMI data from Germany and the Eurozone, and US GDP figures.
- Euro area private-sector activity expanded at its fastest pace since November.
- German manufacturing expanded for the first time since June 2022.
- ECB President Lagarde dismissed speculation about an early departure.
- EUR/USD trades near 1.1770 as the US Dollar trims its advance.
- US GDP is expected to grow at an annual rate of 3% in Q4.
- Geopolitical tensions in the Middle East are contributing to dollar strength.
The current environment presents challenges for the euro. While positive economic indicators within the Eurozone offer some support, the strength of the US dollar, driven by expectations of continued hawkish policy and a robust economy, weighs on the currency. Geopolitical uncertainty further favors the dollar as a safe-haven asset, potentially hindering any significant euro appreciation. The upcoming economic data releases will be crucial in determining the near-term direction of the euro.