The euro area economy is showing signs of recovery, with a major rebound in services activity. This has led to a rise in the euro’s value and dampened expectations for a rate cut by the European Central Bank (ECB) in June, at least for the time being.
The French economy stabilized in April, while the German economy expanded for the first time in ten months. This has led to a rise in the euro’s value, with EUR/USD climbing to 1.0695 from around 1.0645 earlier in the session.
The rebound in the economy has led some analysts to believe that the ECB may have some added room to work with and may not need to cut rates as soon as previously thought. However, most analysts still believe that the ECB will at least go with a first rate cut in June at the minimum.
The odds of a June move have been reduced slightly to ~63% from ~67% before the data. However, this still fits with a likely push for June once the Q1 wages data confirms it next month.
Overall, the euro bounce we’re seeing might not have much legs to it. However, from the near-term chart, EUR/USD is working above both its 100 and 200-hour moving averages again, indicating a more bullish near-term bias at least.
