The Eurozone must face challenges from a rather weak economy.

The Euro has been consistently weakening in value since the beginning of the past month. The depreciation this time is driven by investor expectations that the European Central Bank (ECB) may keep interest rates unchanged at the upcoming meeting scheduled for September 14, due to the poor performance of businesses and the prolonged sluggishness of the inflation rate over the past several months.

Philip Lane, the Chief Economist of the ECB, acknowledged that the inflation rate for goods and services is at a moderate level and he anticipates that the Core Consumer Price Index (Core CPI) will slow down in the coming months. However, in a recent statement, ECB President Christine Lagarde did not explicitly indicate whether the ECB intends to raise or maintain interest rates.

Expectations for inflation rates in the Eurozone for the next 12 months remain at 3.4% as of July, which is considered low compared to previous levels. Meanwhile, inflation rate forecasts for the next 3 years have increased to 2.4% from 2.3%. Additionally, an ECB survey shows that consumers expect their income for the next 12 months to increase by 1.1%, while spending is expected to remain stable at 3.4%.

The Eurozone's unemployment rate is at a historic low of 6.4%, which matches market expectations. The number of unemployed individuals increased by 73,000 compared to the previous month, totaling 10.944 million people. At the same time, youth unemployment rate, which measures unemployment among those aged under 25, remained at a record low of 13.8%. This is the lowest youth unemployment rate ever recorded in Germany, while the highest unemployment rates are found in Spain.

Bank lending increased by 1.3% on an annual basis, reaching 6.86 trillion euros in July. This is the slowest growth rate since November 2018 due to delayed loan demand, resulting from tighter policies since the beginning of the year, and also because companies themselves have been slow to borrow.

Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented, "The Eurozone may not have entered a downturn in the first half of the year, but the second half will certainly bring greater challenges. This will likely lead to job cuts, a slowdown in production capacity, and even a reduction in GDP, which is currently at -0.1% in the third quarter."

Techical analysis data (5H)

Resistance: 0.9326, 0.9340, 0.9347

Support: 0.9304, 0.9298, 0.9283

Source: Investing.com