EUR/USD has posted slight losses in the Monday session after strong gains on Friday. Currently, the pair is trading at 1.1731, up 0.07% on the day. On the release front, it’s a quiet start to the week. Eurozone Consumer Confidence, which hasn’t posted gains since January, is expected to dip to -1 point. In the U.S, Existing Home Sales is forecast to climb to 5.46 million. On Tuesday, Germany and the eurozone will release service and manufacturing PMIs.
The dollar was broadly lower on Friday, after U.S President Trump made comments critical of Federal Reserve monetary policy. U.S presidents traditionally do not comment on moves by the Fed, but that did not prevent Trump from tweeting on Thursday that “tightening now hurts all that we have done”. On the weekend, Treasury Secretary Steven Mnuchin engaged in damage control, saying at the G-20 meeting that Trump was not interfering with the Fed policy of gradually raising rates. However, investors weren’t buying Mnuchin’s apologetics, and the U.S dollar continued to lose ground in Monday’s Asian session. There was more for investors to fret over, as Trump also attacked the EU and China for manipulating their currencies and keeping interest rates lower. This has raised concerns that the current global trade war could be followed by a currency war.
The euro posted marginal gains last week and continues to stay close to the 1.17 line. Traders should be prepared for some stronger movement in the Tuesday session, with the release of service and manufacturing PMIs for Germany and the eurozone. Both manufacturing PMIs have shown a troubling downward trend for the past six months – will this continue in June? Although the PMIs continue to show expansion in Germany and the eurozone, investors remain nervous that the escalating trade war is having a negative impact on the manufacturing sector. If the readings continue to head lower on Tuesday, the euro could lose ground.
