Societe Generale’s Kenneth Broux and colleagues highlight softer Eurozone PMI price data and a dovish tone from European Central Bank (ECB) President Lagarde as key drivers for EUR/USD.
They see the 1.13-handle as in focus, with support around 1.1390 and 1.1350
The widening 2y UST/EGB spread and stretched technicals frame risks of further Euro weakness against the Dollar. Euro pressured by softer PMI prices “Inflation scare over in the eurozone? 1.13-handle beckons for EUR/USD.” “S&P Global notes the following for the PMI: “There were signs of inflationary pressures easing in June. Although input costs continued to rise rapidly during the month, the rate of inflation eased to the slowest since February, just before the outbreak of war in the Middle East.
Weaker increases in input prices were seen across both the manufacturing and service sectors, with the pace of inflation remaining sharper in the former. Cost inflation eased across Germany, France and the rest of the eurozone as a whole. In turn, the rate of output price inflation also slowed in June, albeit to a lesser extent than was seen for input costs.