Recent Eurozone GDP data showing a 0.2% quarter-on-quarter contraction in Q1 2026—revised lower from an initial 0.1% estimate and marking the first decline since late 2022—has anchored trader sentiment for Q2 growth around modest positive territory. Energy price spikes and heightened uncertainty stemming from Middle East developments weighed on net trade, fixed investment, and household spending, prompting downward revisions to full-year 2026 forecasts to roughly 0.9–1.1%. The ECB’s decision to hold policy rates steady in April while flagging upside inflation risks and a potential June tightening has reinforced caution, though resilient labor markets and government spending on infrastructure provide some offset. With the two leading bins (0.4–0.7% and 0.8–1.1%) together capturing under half the probability, outcomes hinge on incoming PMI readings, energy futures, and the June ECB meeting for clarity on whether the Q1 weakness proves transitory.