EUR/USD might appreciate if Eurozone PMIs record a rise – Commerzbank

EUR/USD declined modestly during Tuesday’s session. Economists at Commerzbank analyze the pair’s outlook ahead of the long weekend.

Trading in EUR/USD will be rather sluggish ahead of the weekend
On the Dollar side, the last economic data to which the USD could react is due today; it is durable goods orders, initial jobless claims and the University of Michigan’s sentiment. If the data confirms the market’s view that the Fed will have to cut rates soon the Dollar might again depreciate by a few more pips.

On Thursday, the Eurozone PMIs for November are due for publication. If they record a rise, the market might adjust its rate cut expectations for the ECB so that the Euro might appreciate.

We do not expect the indices to signal a recovery of activity though, at best we expect to see a stabilisation in recessionary territory. That means that they are probably not suited to provide additional support for the Euro against the Dollar, allowing the EUR to move closer to the upside and towards 1.10.

Trading in EUR/USD will be rather sluggish ahead of the weekend and will make us all yawn. But you never know what surprises may be lurking around the corner, for example on the geo-political front. In that case, thin trading volumes can then lead to strong fluctuations.