ECB Dovishness Likely as Price Pressures Ease, PMI Rises

Easing price pressures amid falling energy costs following the US-Iran deal have strengthened the case for a dovish tilt from the European Central Bank. Economic activity showed tentative signs of stabilizing in June, with the composite PMI rising to 49.5 from 48.5 in May, beating expectations.

The recovery was driven by a rebound in the services sector, though manufacturing remained subdued. The data suggests that the drag from energy-driven inflation is fading, giving the ECB more room to consider rate cuts or other accommodative measures.