Euro rally continues but ECB not smiling

The euro has rallied against the US dollar for a third straight day. In the European session, EUR/USD is trading at 1.1338, up 0.50% on the day. The euro has gained 1.6% this week.

The eurozone and Germany will release services and manufacturing PMIs for May on Thursday. The markets are expecting a slight improvement, but the numbers are still likely to paint a gloomy economic picture.

Eurozone Manufacturing PMI is expected to improve to 49.3 from 49.0 and Services PMI to 50.3 from 50.1. Germany, the largest economy in the bloc, is also expected to post a slight improvement in manufacturing (48.9 from 48.4) and services (49.5 from 49.0).

The eurozone and Germany will release services and manufacturing PMIs on Thursday. The markets are expecting a slight improvement, but the numbers are still likely to paint a gloomy economic picture which would support further rate reductions. The ECB cut rates last month to 2.25% from 2.5%, its lowest level in over two years.

ECB says euro rising due to riskiness of US assets

The euro has been on a tear over the last few months. In April, when many of President Trump's tariffs took effect,the euro soared as much as 7%, a result of the "sell US" wave in the financial markets in response to the stiff US tariffs.

ECB President Christine Lagarde discussed the euro's surge last week, saying that it was due to the "uncertainty and loss of confidence in US policies" in the financial markets and that Trump's trade policies had weighed on eurozone growth and confidence.

In the US, it's been a quiet data calendar but there's been a host of Federal Reserve members speaking. Many of the members have backed up Fed Chair Powell's wait-and-see stance and determining rate moves based on the data.

EUR/USD has pushed above resistance 1.1307 and is testing resistance at 1.1331. Above, there is resistance at 1.1375

1.1263 and 1.1239 are the next support levels