- EUR / USD continues to push above 1.1200 on risk flows.
- The US dollar index falls below 97.50 after optimistic US data.
- The European Central Bank should expand the PEPP.
Widespread selling pressure surrounding the greenback allowed the EUR / USD to extend its rally for the seventh consecutive day on Wednesday. After reaching its highest level since March 12 at 1.1250, the pair entered a consolidation phase and was last seen rising 0.6% on the day to 1.1235.
The safe haven continues to struggle to find demand in the risk environment of the market. Although the US dollar index remained relatively calm near 97.50 during trading hours in Europe, macroeconomic data releases made the index lose strength.
Monthly data released by the ADP Research Institute revealed that private sector employment in the United States fell by 2.76 million in May. This reading greatly exceeded market expectations for a drop of 9 million. In addition, the ISM’s non-manufacturing PMI increased to 45.4 from 41.8 in April to reveal that trade activity in the services sector continued to recover.
Will the ECB offer additional incentives?
On Thursday, the European Central Bank (ECB) will announce its monetary policy decisions. Although the ECB should keep its key rates unchanged, investors will keep an eye on the changes to the Pandemic Emergency Purchasing Program (PEPP).
In anticipation of the ECB meeting, “a 750 billion euro PEPP expansion, the bank’s bond buying effort launched in March, will likely be accompanied by a long-standing warning that the main burden of European recovery must be borne by national governments “. said Joseph Trevisani. “The additional limits of the PEPP and the cheerleading that Ms. Lagarde will grant to the new EU program should keep the euro dynamic”.