The Eurozone remains fragile due to shrinking external demand.

The Euro has slightly depreciated to around 0.93 euros per dollar as investors show increasing interest in the US dollar. This shift follows the unexpectedly robust US job report, along with the upcoming announcement of US inflation figures, exerting pressure on other currencies.

A positive outlook was expressed by Isabel Schnabel, a policymaker at the ECB, who spoke to Reuters. She indicated that further interest rate hikes might be challenging and unlikely following the recent report revealing a two-year low in Eurozone inflation rates in November. Additionally, François Villeroy de Galhau, an ECB policymaker and head of the Bank of France, suggested the possibility of reducing interest rates in 2024.

The Eurozone economy contracted by 0.1% in the third quarter, marking its first contraction since the last quarter of the previous year. The primary cause was a decrease in external demand, evident in a 1.1% decline in exports and a 1.2% reduction in imports, despite a 0.3% increase in government spending. Moreover, several countries experienced economic contractions, with Germany, France, and the Netherlands contracting by 0.1%, 0.1%, and 0.2%, respectively.

Bank lending to households in the Eurozone increased by 0.6% year-on-year in October due to sustained credit demand despite consecutive interest rate hikes, leading to increased financial burden on households. However, lending to companies decreased by 0.3% due to increased costs and reduced external demand.

The Eurozone Manufacturing Purchasing Managers' Index (PMI) slightly rose to 44.2 in November, marking the 17th consecutive month of contraction. Austria experienced the most significant contraction in production capacity. Both new orders and export sales decreased due to dwindling external demand. However, business confidence showed slight improvement.

The unemployment rate in the Eurozone remained stable at 6.5%, with an increase of 48,000 unemployed individuals compared to the previous month, totaling 11.134 million. Simultaneously, youth unemployment, measuring individuals below 25 years old, surged to a yearly high of 14.9%.

Retail sales in the Eurozone increased by 0.1% month-on-month in October after four consecutive months of decline. However, consumer demand remained subdued, resulting in a 1.1% decline in food and beverage sales and a similar decrease in fuel sales. Nevertheless, retail sales continued to rise in Germany and the Netherlands.

Techical analysis data (5H)

Resistance: 0.9289, 0.9301, 0.9310

Support: 0.9269, 0.9261, 0.9249

Source: Investing.com