The ECB may cut interest rates twice more amid slowing economic data.

The euro has weakened again after the Eurozone's Purchasing Managers' Index (PMI) data came in weaker than expected, leading to speculation that the ECB will cut interest rates two more times this year. Meanwhile, Vice President Luis de Guindos stated that the central bank needs to consider additional data in September, along with macroeconomic forecasts, to make further decisions on rate cuts. President Christine Lagarde also commented that the monetary policy decisions in September need to be based on domestic economic data.

The Eurozone consumer confidence index rose by 1.0 point from the previous month to -13 in July, higher than the market's expectation of -13.4, due to the ECB's rate cut in June. This was further supported by the continuous easing of interest rates, leading consumers and investors to have a more positive outlook on the domestic economy. Additionally, political concerns in France eased after the parliamentary elections, reducing internal tensions in the country.

The Eurozone manufacturing PMI fell to 45.6 in July from 45.8 in June, marking the 16th consecutive month of declining production. This indicates a continuing slowdown in the manufacturing sector, as evidenced by the reduction in new business, which has also led to decreased employment. The cost inflation in production continues to rise due to increasing oil prices, which have driven up transportation costs to their highest level in 18 months.

The Eurozone services PMI dropped to 51.9 in July from 52.8 the previous month. Although the service sector continues to expand, it shows a slowing growth rate. This is supported by the increase in new orders, prompting companies to continue hiring more staff, despite the ongoing rise in raw material price inflation.

Household credit expansion in the Eurozone increased by 0.3% year-on-year to €6.879 trillion in June. This is due to the ECB's financial tightening measures, which, although they have lowered interest rates somewhat, remain high compared to previous years. This is expected to reduce consumer demand. At the same time, corporate lending increased by 0.7% to €5.147 trillion, indicating the financial crisis currently unfolding in the Eurozone.

Techical analysis data (5H)

Resistance: 0.9221, 0.923, 0.9237

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.9198 - 0.9205 but cannot break the support at 0.9205, you may set a TP at approximately 0.923 and SL at around 0.9189 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.9221 - 0.923, you may set a TP at approximately 0.9237 and SL at around 0.9198 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.9221 - 0.923 but cannot break the resistance at 0.9221, you may set a TP at approximately 0.9198 and SL at around 0.9237 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.9198 - 0.9205, you may set a TP at approximately 0.9189 and SL at around 0.923 or according to your acceptable risk.

Pivot point July 26, 2024 07:32 PM. GMT+7