On April 9, geopolitical conflicts, high energy costs, and weak demand are collectively dragging down the construction sector in the Eurozone, with a bleak outlook for recovery in the short term. According to the Eurozone Construction Purchasing Managers' Index (PMI) report released by S&P Global on April 8, the Eurozone construction sector experienced its sharpest contraction in five months in March 2026, while cost pressures surged to their highest level in 40 months. Data showed that the Eurozone Construction PMI fell further to 44.6 in March from 46.0 in February, marking the 47th consecutive month below the 50.0 threshold that separates expansion from contraction, indicating a continued and accelerating decline in sector activity. New orders also saw their largest drop since last October, highlighting clear weakness in demand. The report noted that the surge in energy prices due to conflicts in the Middle East was a key driver of rising costs. As a result, business sentiment regarding the year-ahead operational outlook has turned pessimistic, reversing the briefly positive mood seen in February. Usamah Bhatti, an economist at S&P Global Market Intelligence, stated, "The outlook for the Eurozone construction sector has clearly weakened."
Additionally, the latest minutes from the Federal Reserve's March monetary policy meeting revealed that some central bank officials view the conflict involving Iran as posing "two-way risks" to the U.S. economy. During the monetary policy meeting held from March 17 to 18, the Fed announced it would maintain the target range for the federal funds rate between 3.5% and 3.75%, marking the second consecutive pause in rate changes. The newly released minutes indicated that, following the outbreak of the Iran conflict, policymakers exhibited significant divergence in their views on the U.S. economic outlook, discussing various scenarios and corresponding policy responses. Most officials expressed concern that a prolonged conflict could negatively impact the labor market, potentially necessitating interest rate cuts. However, many policymakers also emphasized that upside risks to inflation might ultimately require rate hikes. Among them, officials leaning towards "hiking risks" urged the Fed to include relevant wording in the post-meeting statement to highlight scenarios where rate increases could be possible under specific conditions.
Key data to watch today include Germany's February seasonally adjusted industrial production month-on-month, Germany's February seasonally adjusted exports month-on-month, the U.S. fourth-quarter real GDP annualized quarter-on-quarter final reading, U.S. February personal spending month-on-month, U.S. February PCE price index year-on-year, U.S. initial jobless claims for the week ending April 4, and the U.S. February wholesale inventories month-on-month final reading.
USD Index The USD Index trended lower yesterday, briefly falling below the 99.00 mark to hit a 21-day low, and is currently trading around 99.10. The easing of geopolitical tensions, which reduced safe-haven demand for the U.S. dollar, was the primary factor pressuring the index downward. Moreover, a decline in crude oil prices, which tempered expectations for Fed rate hikes, also contributed to the weakness. Today, resistance is seen near 99.50, with support around 98.50.
EUR/USD The euro moved higher yesterday, briefly breaking above the 1.1700 level to reach a five-week high, and is currently trading around 1.1650. The weakening USD Index, driven by reduced safe-haven demand and lower crude oil prices dampening Fed hike expectations, was the main factor supporting the euro's rise. Additionally, ongoing market reaction to recent hawkish comments from European Central Bank officials provided further support. Resistance is anticipated near 1.1750 today, with support around 1.1550.
GBP/USD The British pound advanced yesterday, surpassing the 1.3400 level to hit a six-week high, and is currently trading around 1.3390. The primary driver behind the pound's climb was the softer USD Index, pressured by diminished safe-haven appeal and moderated expectations for Fed rate cuts. Economic data released from the UK during the session was mixed and had limited market impact. Resistance is expected near 1.3500 today, with support around 1.3300.
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