The economy of the Eurozone remains contracted.

The Euro is currently stable at a level of 0.915 Euros per US dollar due to investors considering the possibility of another interest rate cut. This consideration is based on inflation rates and Purchasing Managers' Index (PMI) data, coupled with reports from the United States Federal Reserve's meeting in December. The Fed has not yet clearly outlined a date for monetary policy easing, as policymakers emphasize the need to maintain interest rates for some time.

Regarding inflation in the Eurozone, both Germany and France experienced increased inflation rates in December. The primary causes were higher energy imports in the Eurozone and increased energy costs, aligning with investor and analyst expectations that inflation rates would indeed rise in December. Additionally, the Eurozone's PMI contracted for the seventh consecutive month.

Credit released by Eurozone banks to households increased by 0.5% annually, totaling 6.87 trillion Euros in November. However, the growth in credit release has been slowing down, indicating constrained spending ability. This slowdown is significant in late 2023 due to the stringent monetary measures by the European Central Bank (ECB). Moreover, lending to corporations remained unchanged, with private sector lending growing by 0.4% in November.

The Eurozone's manufacturing PMI slightly increased to 44.4 in December, surpassing market expectations of 44.2. Nevertheless, industrial production has continued to contract for seven consecutive months. New orders and reduced purchasing activities both domestically and internationally have led manufacturers in the Eurozone to consistently decrease their inventory levels by lowering product prices to stimulate sales.

The service sector's PMI increased slightly to 48.8, yet it has contracted for five consecutive months due to reduced service demand towards the end of the year. Additionally, job growth has slowed down, and raw material cost inflation hit a five-month low. Despite slightly improved business confidence, forecasts for future growth over the next year remain weak.

Construction in the Eurozone declined by 0.7% year-on-year in October, marking the highest contraction since March. This decline was due to reduced construction activities impacted by the ECB's interest rate hikes, directly affecting rising raw material prices and increased daily living expenses for households. This situation led to decreased interest in real estate activities for both rental and profit-making purposes.

Techical analysis data (5H)

Resistance: 0.9174, 0.9185, 0.9199

Support: 0.9148, 0.9135, 0.9123

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.9135 - 0.9148 but cannot break the support at 0.9148, you may set a TP at approximately 0.9185 and SL at around 0.9123 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.9174 - 0.9185, you may set a TP at approximately 0.9199 and SL at around 0.9135 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.9174 - 0.9185 but cannot break the resistance at 0.9174, you may set a TP at approximately 0.9135 and SL at around 0.9199 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.9135 - 0.9148, you may set a TP at approximately 0.9123 and SL at around 0.9185 or according to your acceptable risk.

Pivot point January 5, 2024 07:38 PM. GMT+7