EUR/USD flows: EUR slips on soft PMIs

Weak PMIs from the Eurozone have knocked EUR/USD lower, undermining the credibility of yesterday’s attempt at hawkishness form Lagarde. While EUR yields remain slightly above the levels seen before the ECB, the market hasn’t really bought the view of an extended plateau to rates, and is still pricing a very similar path for Fed and ECB cuts over the next year, despite the Fed’s more obvious acceptance of the necessity of easing. EUR/USD seems unlikely to regain 1.10 today, and may have some more downside towards 1.09 if European equities extend their decline after yesterday’s reversal day.