Eurozone statistics to be released this week are expected to reveal an inflation rate well above the European Central Bank's (ECB) target as well as strong money supply growth, suggesting further rate hikes in the 12-nation bloc.
Provisional figures for June are forecast to show inflation remaining at 2.5 percent, exceeding ECB's target of close to or below 2.0 percent, although some economists are not ruling out a slight decline.
"We expect core inflation to remain more or less stable in June. That should mean the flash estimate will drop back to 2.4 percent," Credit Suisse economists said.
Money supply and private sector lending growth are forecast to have remained strong in May, pointing to further interest rate hikes.
Economists are expecting M3 money supply to be up 8.9 percent compared with April's record growth rate of 8.8 percent.
"The ECB should be able to conclude that policy is still exerting substantial stimulus to the euro area economy, and consequently rates are still some way from neutral," Credit Suisse economists said.
The European Commission's economic sentiment indicator is predicted to ease to 106.2 in June from 106.7 in May, reflecting a slight fall in industrial confidence due to the strong euro, high oil prices and rising interest rates.
Industrial confidence is forecast to decline to 1 from 2, while consumer confidence should improve slightly to -8 from -9. The business climate indicator is seen falling to 1.02 from 1.06.
"We think this series is now at or close to a peak and expect a small fall in June," HSBC economists said. "Consumer confidence is not so useful, but, for what it's worth, may improve a little this month," they said.
Business confidence is expected to strengthen in June in France and Italy while slipping back in Germany.
In France confidence is forecast to edge back up to 108 in June after dropping to 107 in May from a five-year high the previous month but economists are not expecting a convincing recovery.
In Italy sentiment in the business sector is forecast to rise further in June, reaching 97.0 after its surprise jump the previous month. In May, it climbed to 96.8 from 96.0 in April, outpacing economists' expectations for an increase to 96.0.
In Germany, by contrast, the Ifo business climate index is likely to ease to 105.2 in June from 105.6 on the prospect of further interest rate hikes in response to inflation pressures. "Despite the football world cup, the business survey should decline," HSBC economists said.
"The world is on inflation alert and monetary policy is being tightened," they said.
Added UBS economist Ed Teather: "We expect a slight deterioration in the headline and expectations indexes but see the current assessment remaining stable."
First quarter growth in France is forecast to be confirmed at 0.5 percent compared with the first three months of 2005 and at 1.5 percent year-on-year. "We don't expect any revision to the slightly disappointing first-quarter quarter-on-quarter rise of 0.5 percent," HSBC economists said.
On the jobs front, unemployment numbers are likely to post a further fall in June in Germany, the eurozone's largest economy, albeit by a more modest 33,000 rather than the sharp 93,000 drop in May.
Teather at UBS said the latest release would "signal a recovery in the labour market." Credit Suisse economists too are predicting "a turning point in the still lackluster labour market."
In France jobless numbers are expected to have fallen by a seasonally adjusted 20,000 in May compared with a decrease of 39,000 in April, with the unemployment rate forecast to remain at 9.3 percent.
"French unemployment has fallen by roughly a quarter of a million over the last year, while employment has been much more subdued - the difference largely explained by the impact of government measures," HSBC economists said.
"There seems little reason to expect this to stop at the moment," they said.
The eurozone current account deficit meanwhile is expected to have widened to 3.5 billion euros in April from a shortfall of 3.2 billion in March.