Thursday's PMIs suggested the worst in the Eurozone's economic sentiment may be past us. The composite gauge rebounded more than expected despite both manufacturing and services indicators remaining in contractionary territory.

The notion that recessionary pessimism may have peaked in the Eurozone is a positive for EUR/USD, but whether this can offer support to the pair already in the near term is a different question. 

Despite having modestly tightened, the 2-year EUR-USD swap rate differential is at -155 bps. The last time it was trading around these levels, EUR/USD was in the 1.03/1.04 area. We keep favouring a stabilisation around 1.0900 for now.