Euro edges lower as markets weigh weak PMI data and stronger German IFO

Euro dips on weak PMI data, finds partial support in IFO report

The Euro (EUR) fell by around 0.3% against the US Dollar (USD) in early North American trading on Thursday, underperforming most G10 currencies except the Swedish Krona (SEK) and New Zealand Dollar (NZD). The drop followed a disappointing round of preliminary Purchasing Managers’ Index (PMI) data for May, which showed contraction across the Eurozone’s largest economies—Germany and France.

Eurozone, German, and French PMIs all came in below the critical 50.0 mark, indicating that economic activity in both manufacturing and services is shrinking. This added to concerns over the bloc’s growth outlook and further supported expectations for a potential rate cut by the European Central Bank (ECB) in June.

However, Germany’s IFO business sentiment index offered a silver lining. The report showed slight improvements in both the current assessment and business expectations sub-indices, helping to cushion some of the Euro's losses.

ECB communication has remained dovish, with policymakers signaling a strong bias toward easing policy further this year. Meanwhile, EU trade negotiations with the United States are in focus, with reports suggesting that the EU has made an offer to lower tariffs on select agricultural and manufactured goods.

The Euro remains range-bound but pressured, as investors await further clarity on monetary policy and international trade dynamics.