The EUR/USD currency pair staged a recovery following the release of weak US data, reclaiming levels above 1.0900 during the American session.
Despite the calmness in the market due to US holidays, investors are now turning their attention to nonfarm payroll data and FOMC minutes releases.
These factors may play a crucial role in shaping the market’s future movements.
Negative Revision to Eurozone Manufacturing PMI, But ECB Remains Hawkish
In terms of economic data, the Eurozone June Manufacturing PMI was negative, with the headline decreasing from 43.6 to 43.4.
Despite these weaker figures, the European Central Bank (ECB) remains hawkish and is expected to raise interest rates at the next meeting on July 22.
Additionally, there are odds of another rate hike in September, with a probability of over 50%, driven by elevated inflation in the Eurozone.
The rebound in EUR/USD from 1.0870 to 1.0935 on Monday can be attributed to a weaker US dollar.
Weak US Dollar Boosts EUR/USD Rebound as US Data Disappoints
Disappointing data from the US, including a drop in the ISM Manufacturing PMI from 46.9 to 46 instead of the expected increase, and declines in the Prices Paid Index as well as the Employment Index further supported the EUR/USD pair’s ascent.
Fed Comments Support the Dollar, Key Labor Market Data Ahead
Support for the US dollar comes from hawkish comments made by the Federal Reserve. Market focus for this week will be on the release of the Fed’s minutes from its recent meeting on Wednesday.
In addition, key labor market data is expected on Thursday and Friday, such as ADP, Nonfarm Payrolls, Jobless Claims and JOLTS.
The outcome of this data could impact expectations for a Fed rate hike, although the market is currently pricing in a 25 basis points increase in July.
GBP/USD at 1.2700 Amid Market Uncertainty; Disappointing US Data and Hawkish BoE Clash
GBP/USD pair remains stagnant around 1.2700 due to market uncertainty.
Conflicting factors like the Bank of England’s hawkish stance as well as weak US data are keeping the market direction unclear.
Concerns about a US recession and escalating US-China tensions are also weighing on market sentiment.
The US yield curve has reached its lowest point since 1981, further eroding market confidence. As a result, the GBP/USD pair is consolidating losses and anticipating upcoming data/events.
Both the Fed and BOE are expected to raise interest rates, and FOMC minutes could influence market sentiment.
Trading for the GBP/USD pair is expected to be dull due to the US Independence Day holiday.
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