The euro edged slightly lower against the dollar on Monday, pressured by a resilient greenback as investors positioned ahead of a heavy slate of US data releases and Fed communication this week.
With markets reassessing the outlook for Federal Reserve policy in light of delayed economic releases and upcoming speeches, the dollar held firm, weighing on the single currency.
In the euro area, news from France highlighted a complex backdrop for business confidence. The French finance ministry announced EUR 9.2 billion in new corporate investment commitments, reinforcing the country’s long-standing appeal as an investment hub despite heightened political instability. However, persistent political tensions continue to cloud the outlook.
Meanwhile, Italian inflation confirmed a notable deceleration, easing to 1.2% in October from 1.6% in September, the lowest in a year. If this cooling trend is mirrored across the bloc, expectations of a more dovish stance from the ECB may strengthen, potentially capping upside for the euro in the near term.
This week’s euro-area catalysts include Thursday’s ECB General Council meeting and the flash estimate of Eurozone consumer confidence, followed by Friday’s HCOB PMI releases for Germany, France and the wider bloc. President Christine Lagarde is also due to speak, and markets will be watching closely for any signal on the policy stance.
Together, these events could inject volatility into both the currency and regional bond markets. Euro-area yields have already started the week on the back foot, with the German 10-year drifting toward 2.70% and the French equivalent easing to 3.40%, a move that has added mild downward pressure on the single currency.
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