The ECB remains concerned about inflation.

The euro strengthened rapidly after the release of the latest European Central Bank (ECB) meeting minutes. The minutes revealed that policymakers are worried about the latest inflation trends despite cutting interest rates. If inflation rises above the 2% target in the long term, it could have prolonged adverse effects on the economy. The ECB signaled that it might cut interest rates in the future but did not specify a clear timeline.

ECB policymakers still need to monitor the eurozone's recovery to see if it meets expectations, as private sector consumption recovery lacks sufficient signs to support economic resurgence. Although inflation has decreased, current economic data does not increase confidence among some ECB policymakers that inflation will approach the 2% target by 2025.

After the ECB's recent 25 bps interest rate cut, following nine consecutive months of holding rates steady, the ECB still needs additional data for future decisions. They also commented that future rate adjustments should not be predetermined but must ensure that inflation decreases to the set target. The ECB confirmed its commitment to maintaining a strict enough interest rate policy to achieve this goal.

Eurozone inflation dropped to 2.5% year-on-year in June, down from 2.6% the previous month. Preliminary data also showed that food prices rose at a slower rate, while energy prices increased only slightly. Inflation for non-energy industrial goods remained stable. Core inflation, excluding volatile food and energy prices, also held steady at 2.9%. By country, inflation trends declined in France, Germany, and Spain but slightly increased in Italy and the Netherlands.

Wages in the eurozone rose by 5.3% year-on-year in the first quarter, marking the fastest annual wage growth in a year. Wage growth was rapid in the manufacturing sector at 5.8%, while professions related to science saw a 6.7% increase. Among the largest economies in the bloc, wage growth was particularly swift in Germany, Italy, and Spain, but slowed in France.

The rise in wages has also driven up labor costs. Hourly wages in the eurozone increased by 5.1% year-on-year in the first quarter, and salaries per hour worked rose by 5.3%, resulting in an overall labor cost increase of 5.2%. Due to these rising costs, companies might need to reduce hiring in the future and may need to pass on higher costs to product prices.

Techical analysis data (5H)

Resistance: 0.9243, 0.925, 0.9255

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 0.925 and SL at around 0.9219 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.9243 - 0.925, you may set a TP at approximately 0.9255 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 0.9243 - 0.925 but cannot break the resistance at 0.9243, you may set a TP at approximately 0.9226 and SL at around 0.9255 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 0.9219 and SL at around 0.925 or according to your acceptable risk.

Pivot point July 5, 2024 07:30 PM. GMT+7