Yesterday, the euro surged following robust activity data in Europe, while the US experienced a slowdown in business growth, causing the dollar index to slip and enabling the euro to regain some lost ground. The Services PMI hit its highest level in eleven months, driven by strong new orders and employment growth, bolstering the currency. Despite accelerated price hikes, service sector cost inflation remained subdued compared to previous highs.

However, business expectations for the upcoming year dipped to a three-month low, signaling waning confidence in the service sector. Although the euro-dollar pair showed some recovery in recent days, it remains vulnerable to downward pressure, with early trading indicating slight losses as traders await forthcoming economic data from both Europe and the US.

On Thursday, the euro may see a rebound if German Consumer Confidence figures surpass market expectations of -25.9 points. Additionally, the euro-dollar pair could gather momentum if US GDP data falls below the market consensus of 2.5%, already lower than the previous reading of 3.4%. Friday’s release of core PCE prices could also impact the market, with weaker-than-expected US data potentially weighing on US treasury yields, which have been consolidating near this year’s highs.