ECB May Cut Interest Rates Soon.

The euro has been weakening continuously since last month, as investors anticipate that the European Central Bank (ECB) will cut interest rates by 25 basis points later this week. This expectation is based on signals of slowing inflation. However, the increase in inflation in May has created uncertainty about the number of interest rate cuts expected this year. In the United States, various economic data continue to show that the domestic economy is increasingly affected by higher interest rates, which may support multiple interest rate cuts by the Federal Reserve this year.

The Economic Sentiment Index in the Eurozone increased to 96 in May, slightly below the forecast of 96.2. The improvement in economic sentiment was primarily driven by better performance in the service sector, as both domestic and foreign demand began to rise. However, the overall economic situation remains stable due to ongoing impacts from high inflation in partner countries.

The unemployment rate in the Eurozone fell to a new low of 6.4%, slightly below the market forecast of 6.5%. The number of unemployed decreased by 100,000 from the previous month to 10.99 million. Meanwhile, the youth unemployment rate for those under 25 years old decreased to 14.1%. However, the major economies within the Eurozone still face higher unemployment rates, with Spain having the highest at 11.7%.

The Manufacturing PMI increased to 47.3 in May from 45.7 in April. Although the Manufacturing PMI indicates that the sector is still contracting, the rate of contraction has significantly slowed. The decline in the manufacturing sector continues to be driven by a slowdown in new orders, exports, and purchasing of goods. On the cost side, raw material costs have been decreasing at a faster rate, while employment has not increased significantly.

The Services PMI slightly decreased to 53.2 in May, down from 53.3 in April, still indicating robust activity in the service sector. This strength is due to the rise in new businesses and additional foreign investment, with demand for services in the Eurozone increasing at the fastest rate in a year. Additionally, the increase in businesses has led to significant employment growth. Furthermore, the inflation rate of raw material costs has been continuously decreasing, keeping service sector prices stable.

Techical analysis data (5H)

Resistance: 0.92, 0.9205, 0.9211

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.9183 - 0.9189 but cannot break the support at 0.9189, you may set a TP at approximately 0.9205 and SL at around 0.9177 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.92 - 0.9205, you may set a TP at approximately 0.9211 and SL at around 0.9183 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.92 - 0.9205 but cannot break the resistance at 0.92, you may set a TP at approximately 0.9183 and SL at around 0.9211 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.9172 - 0.9189, you may set a TP at approximately 0.9177 and SL at around 0.9205 or according to your acceptable risk.

Pivot point June 5, 2024 09:05 PM. GMT+7