Euro retains control

Euro bears remain in control on Monday, as the pair wavers without a clear direction, with upside attempts capped below 1.0700. This is a previous support turned resistance and keeps the five-months low, 1.0610 at a dangerously close distance.

The economic calendar has been light today, but the unexpected deterioration of the Eurozone Consumer Confidence Index has not helped to increase demand for the Euro. On Tuesday the preliminary HCOB manufacturing and Services PMI might set the pair’s near-term direction.

In the mid-term, the Euro is expected to remain on the defensive on the diverging monetary policy outlook of the Fed and the ECB. Recent data has reinforced the US “no-landing” view, forcing the Federal Reserve to delay and downsize its easing plans for 2024.

The ECB, on the contrary, has been giving hints of a rate cut in June. This would put the bank amid the first of the major central banks to start rolling back its tightening cycle, which will likely keep Euro buyers at bay.

In the US the first quarter GDP data, due on Thursday, and Friday’s PCE Prices Index will be key to understanding the Fed’s monetary policy plans. Another batch of strong releases is likely to boat the USD and send the Euro exploring fresh year-to-date lows sub-1.0600.