The euro continues to find support against the US dollar as major European banks highlight two key drivers: a growing monetary policy gap between the ECB and the Fed, and upcoming Services PMI readings. In a note this week, Rabobank strategists pointed to policy divergence as a structural positive for EUR/USD, while Commerzbank analysts stress that Tuesday's Services PMI data from both the eurozone and the United States will set the near-term tone.
Rabobank argues that the ECB’s relatively hawkish stance – holding rates steady for longer – contrasts with the Fed’s expected pivot toward rate cuts amid softening US inflation and a cooling labor market. This interest rate advantage has already lifted the euro to multi-month highs, with EUR/USD trading above 1.10 and up roughly 3% year-to-date. The bank sees further gains if the Fed turns more dovish, though it also warns that EU-US trade tensions and a fragile eurozone manufacturing sector could cap the rally.
Commerzbank, meanwhile, highlights the Services PMI as a critical barometer for central bank policy. A strong eurozone reading could reinforce the ECB’s cautious approach to rate cuts, while a weak US print would fuel expectations of a more aggressive Fed easing. The bank notes that a combination of robust eurozone services data and a soft US figure could push EUR/USD above the 1.09 resistance, though longer-term moves still hinge on wage trends and consumer spending.
The confluence of these factors keeps the world’s most-traded currency pair in focus. For euro bulls, the near-term outlook appears constructive but highly data-dependent. The ECB’s June meeting and the Fed’s May gathering loom as potential catalysts for a sharp repricing of rate expectations, making every economic release a potential market-mover.
