Euro Price ForecastEUR/USD ANALYSIS
Better than expected EZ PMI and ZEW economic sentiment aren’t enough to hold back risk-off environment.
Falling wedge in play which could point to subsequent upside to come.
EURO FUNDAMENTAL BACKDROP
The European trading session kicked off in a positive light this Tuesday from an economic standpoint; beginning with eurozone PMI data (see economic calendar below) which beat expectations on the composite read. Although manufacturing numbers were slightly off the mark, the overall market reaction was positive in terms of the resilience of the region. Growth surprised many analysts considering the winter months which traditionally weighs negatively on the statistic and bodes well for the first quarter period. Declining energy pressures have aided in the disinflationary impact on goods and services thus increasing consumer demand.
That being said, the services sector is still being plagued by sticky wage costs that will continue to add hawkish pressure on the European Central Bank (ECB). The PMI data was then supplemented by a considerable beat on ZEW economic sentiment for February and has reached its highest level since February 2022 reinforcing the optimism within the region.
