Euro little-changed as investors assess PMIs and ECB rate cut sign

The euro held above the $1.08 mark, hovering just below the five-month high of $1.095 reached on March 18th, as investors digested the latest PMI data and remarks from European Central Bank officials.

Euro little-changed as investors assess PMIs and ECB rate cut sign

Recent surveys indicated that Eurozone private sector activity expanded at its fastest pace since August, driven by a notable rebound in manufacturing output. However, the services sector showed signs of cooling, causing the overall growth to fall short of market expectations. Despite the mixed data, the latest figures suggest that the Eurozone economy may be stabilizing after months of sluggish performance.

ECB provids hints about potential monetary easing

Meanwhile, policymakers at the ECB provided further hints about potential monetary easing. ECB official Piero Cipollone suggested that the case for a rate cut is strengthening, citing signs that inflation may be slowing more rapidly than anticipated. His colleague Yannis Stournaras echoed this view on Friday, stating that all indicators point to a rate reduction as early as April. Additionally, ECB President Christine Lagarde warned of weaker economic growth but dismissed concerns that a potential EU response to US tariffs would reignite inflation, signaling that the central bank would not be pressured into maintaining high rates. ECB Governing Council member François Villeroy de Galhau also reinforced expectations for monetary easing, emphasizing that the central bank has room to lower borrowing costs in the coming months.

Inflation next

Investors are now closely watching upcoming inflation data and speeches from key ECB policymakers for further clues on the timing and scale of potential rate cuts, with markets increasingly pricing in an initial move in June and additional cuts later in the year.