German business morale stagnated in May, with the Ifo institute reporting that the business climate index remained constant at 89.3, falling short of the forecasted improvement. The German economy is expected to have slow progress in its recovery this year, with companies being less satisfied with the current business situation. Despite some sectors recovering, the overall outlook remains cautious.
The EURUSD pair is trading around 1.0850 in a tight range. ECB policymakers are hesitant to commit to further rate cuts beyond June due to concerns about reviving price pressures. Traders have lowered expectations of three rate cuts to two this year. Higher wage growth is leading to increased consumer spending and inflationary pressures. Germany’s Ifo Business Climate data for May missed estimates, with the Business Climate Index, Current Economic Assessment Index, and Expectations Index all falling short of expectations.