EUR/USD Steady as Markets Await ECB Rate Decision After Upbeat PMIs

EUR/USD Steady Ahead of ECB Decision After Slight PMI Upside

Euro consolidates near 1.14 with all eyes on Thursday's ECB

The Euro (EUR) is flat against the US Dollar (USD) going into Wednesday's North American session, trading quietly near the 1.14 handle. Markets remain cautious ahead of the European Central Bank (ECB)'s policy meeting on Thursday, where a 25 basis point cut is fully priced in.

Eurozone PMIs offer a mild upside surprise

The latest final Eurozone PMIs came in slightly above expectations. The Services PMI rose to 49.7 (vs. 48.9 expected), while the Composite PMI crossed into expansionary territory, printing 50.2 vs. 49.5. Regionally, German data was slightly weaker, while France saw modest improvements, though both remained in contraction.

These figures provided limited but notable support for the euro, helping the EUR/USD pair maintain its ground despite broader USD strength.

Markets brace for a potentially ‘neutral’ ECB cut

The focus now shifts to the ECB’s June rate decision. While a 25bp cut is widely anticipated, forward guidance and communication tone will be key. A neutral cut, which may signal the end of the easing cycle, could provide further support to the euro, especially if accompanied by a shift away from the dovish bias seen over the past year.

Tightening EU-US yield spreads have also added mild support to EUR/USD as expectations for aggressive ECB easing have been scaled back.

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