The economic growth in the Eurozone may experience a slight slowdown.

The euro has slightly weakened following the latest FOMC meeting report, indicating increased caution from Fed policymakers regarding future interest rate adjustments while maintaining the inflation target at 2%. Additionally, investors are awaiting the European Central Bank's (ECB) meeting report scheduled for Thursday, led by Christine Lagarde, the ECB President, and policymaker Villeroy de Galhau, who indicated a commitment to maintain these high interest rates for several more quarters.

The eurozone's inflation rate has decreased to 2.9% year-on-year (YoY) in October but still exceeds the ECB's 2% target. This decline is supported by lower energy prices and a slowdown in food inflation, with energy costs dropping by 11.2%, while food and beverage inflation reduced to 7.4%. This continuous decrease in inflation rates indicates a more positive trend.

The economic growth (GDP) forecast for the Eurozone is expected to reach 0.6% in 2023, lower than the previous projection of 0.8%, attributed to the persistently high inflation rates despite some reduction, increased interest rates since the beginning of the year, and weakened external demand, directly impacting the European economy. Germany, as the largest economy in the group, is expected to contract by 0.3% this year.

Concerns persist regarding industrial production, which declined by 1.1% month-on-month (MoM) in September, with various sectors experiencing decreased output. Both domestic and international demand contraction remains worrisome, with industrial activity shrinking by 6.9% in September YoY, marking the largest decline since June.

The Eurozone's trade surplus amounted to 10 billion euros in September, significantly higher than the same period last year at 29.8 billion euros. This surge was due to a substantial decrease in imports by 23.9%, totaling 225.8 billion euros, attributed to reduced energy purchases by 33.4% and raw material imports by 21.7%. Exports experienced a slight decline of 9.3%, totaling 260 billion euros.

The trade surplus and service surplus have resulted in an overall current account surplus of 40.78 billion euros, the highest in two years. The service surplus increased to 16.11 billion euros from 14.33 billion euros, driven by a robust tourism sector and reduced expenses stemming from lower oil prices.

Techical analysis data (5H)

Resistance: 0.9172, 0.9185, 0.9192

Support: 0.9152, 0.9145, 0.9132

Source: Investing.com