EUR/USD Strengthened Amid Weakening USD Flows On Monday
EUR/USD tested its highs on Monday, briefly moving towards the 1.1300 level before stabilizing slightly, although the pair still ended the day higher overall. However, the Fiber is still stuck in a short-term consolidation zone.
Last Friday, Moody's downgraded the United States (US) by removing the final AAA rating for government bonds, citing rising US debt and long-standing government deficits that have been ignored or failed to be effectively managed by various presidential administrations. Although the initial investor reaction was shaky, sentiment quickly stabilized and the impact on US creditworthiness was largely ignored. However, the government bond market has its own challenges: the 30-year yield surpassed 5% on Monday, and the 10-year yield surpassed 4.5%.
This week, Federal Reserve (Fed) officials have been actively working to manage market expectations regarding a potential interest rate cut. Fed policymakers have consistently reminded investors that ongoing tariffs and trade policy in the US complicate domestic economic forecasts, which in turn influence policy rate adjustments.
On Thursday, the German and pan-European HCOB Purchasing Managers’ Index (PMI) reports will be released, which survey business expectations on both sides of the Pacific. Modest increases are anticipated for the German and EU-wide PMIs. The main economic data release from the US will be the S&P Global PMI figures for May, with market expectations on average pointing to slight declines in the manufacturing and services components of the PMI report due to the impact of tariffs on business spending.
Source: FXStreet
