EUR/USD held on to recent gains in subdued trade as markets await key event/data risks this week – the preliminary estimates of the January Purchasing Manager Indexes (PMIs) on Wednesday and the European Central Bank (ECB) meeting on Thursday. Economists at OCBC Bank analyze the pair’s outlook.
A more forceful pushback from the ECB can further dampen market expectations for aggressive rate cut
For the upcoming ECB meeting, we will be keeping an eye on how President Christine Lagarde may pull together the somewhat divided Governing Council to agree more on summer timeline concerning a cut. A more forceful pushback from the ECB can further dampen market expectations for aggressive rate cut and this can provide some support for EUR.
But before that, prelim PMIs (Wed) would also be of interest. Improvement in the print can give EUR another boost.
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