The euro weakened on Monday against most major currencies, including the US dollar and the Japanese yen, as investors rotated toward traditional safe havens amid a sharp escalation in geopolitical tensions in Latin America. Market sentiment deteriorated on concerns broader impact in the region.
The single currency also continued to face pressure from disappointing macro signals within the euro area.
On Friday, HCOB Manufacturing PMI data from Spain, Italy and Germany fell more than expected, slipping into contraction territory. If this weakness persists and spreads to other core economies, it could challenge the European Central Bank’s recent stance of keeping interest rates unchanged, forcing policymakers to adopt a more dovish tone.
Looking ahead, this week’s dense economic calendar will be crucial for shaping expectations around ECB policy and the euro’s trajectory. Inflation data from France and Germany are due on Tuesday, followed by euro area and Italian inflation figures on Wednesday. Thursday brings euro zone economic sentiment and unemployment data, while Friday will feature German and French industrial production alongside retail sales figures for Italy and the euro area. Together, these releases will be closely monitored as they could inject volatility into the forex and bond markets.
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