The euro traded around $1.09, remaining below the six-week peak of $1.1 touched on June 22, due to concerns surrounding the potential economic consequences of higher interest rates within the Eurozone. The recently released PMI data from Friday showed a notable deceleration in private sector growth across the Eurozone in June, with Germany experiencing a slowdown in expansion and French business activity contracting for the first time in five months. Investors have also been processing unexpected actions taken by hawkish central banks. It is increasingly likely that the European Central Bank will implement at least two interest rate hikes this year, as inflation levels remain significantly above the policymakers’ target of 2%. Moreover, other central banks in Europe, along with the Federal Reserve, have expressed their commitment to further policy tightening in order to tackle persistently high inflation.
