The euro has weakened due to several factors.

Firstly, the inflation rate is expected to remain high, indicating that the purchasing power of the currency is declining. Additionally, consumer confidence in the Eurozone remains weak, suggesting that the overall economic performance in the region is not strong.

The Consumer Price Index (CPI) has remained relatively stable compared to the previous month, with a reported figure of 7%. The forecast for the next month also indicates a similar number, indicating that interest rates may increase in the following month.

Consumer confidence in the Eurozone has increased by 0.1 points in May compared to April. The figures released on Monday show that the European Commission stated that the preliminary estimate indicates improved consumer sentiment, with a reading of -17.4 in May compared to -17.5 in April. Economists surveyed by Reuters expected a slight increase to -16.8.

Last week, Isabel Schnabel, a member of the ECB's Governing Council, expressed the view that the central bank should continue to fight to control inflation rates "with determination." ECB President Christine Lagarde emphasized that policymakers should take necessary measures to overcome price pressures.

Therefore, the weakening of the euro can be attributed to high inflation, weak consumer confidence, and the need for central bank intervention to address price pressures.

Currently, the United States is facing challenges in raising the debt ceiling. Treasury Secretary Janet Yellen reiterated last week that June 1st remains a "hard deadline" for raising the federal borrowing limit. Failure to meet debt payments by the United States could disrupt financial markets and potentially push the global economy into a recession. This situation may also lead to another increase in interest rates in the following month.

Several regional Fed presidents have increased market expectations for another interest rate hike in the June meeting. They have emphasized that inflation rates have not declined as quickly as they had hoped.

However, Federal Reserve Chair Jerome Powell has created more uncertainty by suggesting a pause in the rate hike cycle during a press conference last Friday. He stated that the tightening of credit conditions implies that "our policy interest rate might not have to rise all that much further to get to a neutral stance."

In summary, the United States is currently grappling with the debt ceiling issue, which has implications for financial markets and may lead to another interest rate adjustment. The statements from Fed officials have increased market uncertainty regarding the future path of interest rates.

Technical analysis data (5H)

Resistance: 0.9255, 0.9260, 0.9266

Support: 0.9244, 0.9238, 0.9234

Source: Investing.com

 

Pivot Points May 23, 2023 09:05 AM GMT+7