EUR weekly forecast

The Euro began the week trading without a clear direction on Monday due to the absence of Eurozone data.

On Tuesday, the single currency was supported by a stronger-than-expected German ZEW economic sentiment index for May.

The data surpassed expectations, printing at 47.1 instead of the more modest estimate of 46, and increased from last month’s reading of 42.9. However, the Euro saw its potential gains capped following Germany’s latest inflation data.

April’s finalized inflation reading printed at 2.2% in the Eurozone’s largest economy, only marginally above the European Central Bank’s 2% target. This led to Euro exchange rates remaining on the defensive.

Going into Wednesday, the common currency struggled to attract support despite the release of some better-than-expected Eurozone data.

The latest industrial production figures exceeded market expectations in March, coming in at 0.6% instead of the expected figure of 0.5%. The Euro then failed to rise despite the release of the Eurozone’s second estimate GDP for the first quarter of the year.

The release confirmed that the Eurozone escaped its technical recession at the end of last year, with a 0.3% expansion of growth in the first three months of 2024. The Euro finished the week fluctuating against its peers after the release of the Eurozone’s latest inflation figures for April.

While headline inflation remained the same at 2.4% as expected, the core figure cooled from 2.9% to 2.7% for this reading, in line with analysts forecasts.

As core inflation fell closer to the ECB’s 2% target, EUR exchange rates struggled to gain momentum after the release.