No major events expected today.

The EUR/USD pair trades around 1.0850 during the early Asian session on Monday. A stronger-than-expected preliminary Purchasing Managers’ Index (PMI) for the Eurozone in May provides some support for the euro (EUR). However, the likelihood of the European Central Bank (ECB) cutting interest rates in the coming months may limit the rise of the main pair.

Stronger U.S. economic data and aggressive comments from Federal Reserve officials could fuel speculation about a delay in the easing cycle this year. Investors estimate a 53% chance of a Fed rate cut in September, down from 64% a week ago, according to the CME FedWatch tool. Investors are awaiting preliminary annualized U.S. Gross Domestic Product (GDP) data for the first quarter (Q1), which is due out on Thursday. Estimates suggest that Q1 GDP grew by 1.5%, down from 1.6% previously. Higher figures are likely to positively impact the U.S. dollar in the near term.

On Friday, U.S. durable goods orders in April increased by 0.7% compared to a downwardly revised 0.8% in March, which was stronger than the expected -0.8%. Meanwhile, the University of Michigan’s consumer sentiment index for May rose to 69.1 from 67.4 in April, better than the forecast of 67.5. The UoM’s five-year inflation expectations dropped to 3% from 3.1%.

ECB policymaker Piero Cipollone stated on Sunday that it is time to cut the interest rate in June as the latest data is moving in the right direction. Meanwhile, ECB President Christine Lagarde stated that she is “really confident” that inflation in the Eurozone is under control, and a rate cut is possible next month. A widely anticipated ECB borrowing cost cut in June could put pressure on the euro against its competitors.

Recommendations: Monitor the 1.0850 level, take Buy positions on a rebound, and take Sell positions if it consolidates below.