Euro News (EUR)

This Tuesday, the main event of the day for Europe will be the release of inflation data for May. As forecast by analysts quoted by Reuters, last month's consumer price growth in the eurozone slowed to 2.0% year-on-year. This data will be key to the European Central Bank rate dynamics.

In May, manufacturing activity in Germany declined. However, this sector saw growth in output volumes for the third month in a row, driven by an ongoing increase in new export orders.

According to the Bank of America (BofA) model, market participants remain bearish on the dollar, particularly against the euro and the British pound.

In May, the Purchasing Managers' Index (PMI) for the eurozone manufacturing sector rose to 49.4 and reached a 33-month high. The index growth matched preliminary estimates, but remained below the 50.0 threshold separating expansion and contraction.

According to Bloomberg, the European Central Bank is set to cut the deposit rate this week, lowering it to 2%. However, this will be the last easy decision for the regulator, as analysts quoted by the agency said, as further action is complicated by uncertainty.

Global markets are experiencing a sell-off in government bonds amid concerns over mounting sovereign debt of major world economies. However, as noted by Reuters, the selling in the eurozone is likely to slow down soon, facilitated by the increasing interest in Bunds as safe havens.

An increase of the indicator value may contribute to the rise in quotes of EUR.

A decrease of the indicator value may contribute to the fall in quotes of EUR.

According to Deutsche Presse-Agentur, German Finance Minister Lars Klingbeil is proposing corporate tax incentives to stimulate investment and revive the country’s stagnant economy. Companies purchasing electric vehicles could claim a 75% tax deduction on the cost in the year of acquisition.

Morgan Stanley forecasts the dollar to fall by mid-2026 to the level last seen during the COVID-19 pandemic. The decline will be driven by the Federal Reserve’s rate cuts and slower US economic growth. The US dollar index will lose 9% and hit 91.