EUR/USD should settle below parity for the time being – Commerzbank

The Purchasing Managers' Indexes (PMIs) of several European countries and the eurozone as a whole will be published on Tuesday. If the figure comes below the expansion mark of 50, this would be another reason to settle the EUR/USD pair below parity, economists at Commerzbank report.

Things might begin to get tight for the euro now

“If the PMIs reinforce recession fears further by falling again, with the eurozone index for services even falling under the expansion mark of 50, it might begin to get tight for the euro. This would also cause market expectations to increase that the ECB might take a break in its rate hike cycle (too) soon despite continued high levels of inflation. It is already being seen as being (too) cautious in its fight against inflation.”

“In addition to the US dollar arguments, the PMIs and thus the euro side are another reason why EUR/USD should settle below parity for the time being.”

See – EUR/USD: Bad German PMI to cement the pair under parity – SocGen