The European Central Bank (ECB) may lower interest rates in the coming months.

The euro continues to strengthen. Investors are closely watching US inflation data, first-quarter GDP, and eurozone employment figures, which could impact future monetary policy. Investors expect the ECB to start cutting rates by the second quarter, while the US Federal Reserve is likely to slow its rate cuts. It is anticipated that the ECB will reduce interest rates by approximately 70 basis points and the Fed by 45 basis points this year.

Eurozone inflation remained steady at 2.4% year-on-year in April, in line with market expectations. Most goods' inflation trends are declining, particularly energy prices, which continue to slow down. Core inflation, excluding volatile energy and food prices, fell to 2.7% from 2.9%, indicating increased pressure from last year's aggressive rate hikes.

The eurozone economy grew by 0.3% in the first quarter of 2024, surpassing market expectations of a modest 0.1% growth after contracting in the fourth quarter of the previous year. This demonstrates the economy's resilience despite facing crises such as high-interest rates and inflation-driven costs. The GDP growth provides the ECB with more options, potentially leading to smaller-than-expected rate cuts this year. Spain's GDP grew the most at 0.7%, followed by Italy at 0.3%.

ECB policymakers are considering more rate cuts, as discussed in the latest ECB meeting, while awaiting further data. The continued decline in inflation is largely driven by falling energy prices. However, inflation may rise again due to ongoing price pressures and strong wage growth, which could prevent inflation from dropping as expected. The overall eurozone's growth capability remains robust, possibly delaying rate cuts further.

The Services PMI increased to 53.3 in April, marking the strongest growth in a year and indicating robust expansion in the service sector. New business volumes continue to rise, though production capacity remains limited, keeping output growth modest. Employment trends also show an upward trajectory, in line with the service sector's expansion.

Techical analysis data (5H)

Resistance: 0.924, 0.9246, 0.925

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.9226 - 0.9231 but cannot break the support at 0.9231, you may set a TP at approximately 0.9246 and SL at around 0.9221 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.924 - 0.9246, you may set a TP at approximately 0.925 and SL at around 0.9226 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.924 - 0.9246 but cannot break the resistance at 0.924, you may set a TP at approximately 0.9226 and SL at around 0.925 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.9226 - 0.9231, you may set a TP at approximately 0.9221 and SL at around 0.9246 or according to your acceptable risk.

Pivot point May 15, 2024 05:59 PM. GMT+7