We believe the Dollar rallied a bit too far on Tuesday, and there is some room for EUR/USD to tick back above 1.0900 into Thursday’s European Central Bank announcement.

At the same time, much of today’s price action in the pair will depend on PMIs. French and German figures are published ahead of the Eurozone-wide numbers. Expectations are modestly optimistic, with the Eurozone composite PMIs seen rising from 47.6 to 48.0, led by marginal gains in both services and manufacturing.

PMIs are often assessed in comparison with other countries. In the case of the Eurozone, against the US and the UK. The consensus for UK PMIs is for a flat 52.1 (composite) reading. Barring a material surprise in the Eurozone print, the lingering divergence between contractionary (EZ) and expansionary (UK) PMIs will keep EUR/GBP pressured today.