Euro inches lower following HCOB PMI data from Germany
EUR/USD held ground after registering modest losses in the previous day, trading around 1.1430 during the European hours on Tuesday. However, the pair withdraws its daily gains following the release of HCOB Purchasing Managers Index (PMI) data from Germany. Traders will likely shift their attention toward PMI data due later in the day.
Germany’s preliminary HCOB Manufacturing PMI flatlined at 50.0 in June, matching forecasts after a 50.1 reading in May and leaving the sector stuck on the threshold between expansion and contraction. Meanwhile, the Services PMI disappointed, dropping to 46.8 from May's 48.1 and missing the 48.7 market expectation.
The upside of the EUR/USD pair is likely capped as the US Dollar (USD) remains stronger amid hawkish sentiment surrounding the Federal Reserve's (Fed) policy outlook. Last week’s Federal Open Market Committee (FOMC) Economic Projections report, which revealed that nine out of 19 policymakers foresee a rate increase in 2026. Momentum grew further after Kevin Warsh, presiding over his first meeting as Fed Chair, caught the market off guard by adopting a significantly more hawkish stance than anticipated.
Market pricing heavily reflects this outlook, with the CME FedWatch tool indicating an 85% probability of at least a 25-basis-point rate hike before the year ends. To gauge the next steps for US monetary policy, investors are closely watching Thursday’s release of the May Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred inflation metric.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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