Eurozone grew slightly in Q2.

The euro remains stable as investors anticipate that the European Central Bank (ECB) will cut interest rates for the second time in its upcoming meeting on the 12th. This expectation is driven by data showing that inflation in the Eurozone fell to 2.2% in August, the lowest level since 2021. At the same time, core inflation dropped to 2.8%. Analysts predict that the ECB may cut interest rates another 2-3 times this year.

The Eurozone Services PMI increased to 52.9 in August from 51.9 in the previous month, surpassing market expectations of 51.9. This marks the seventh consecutive month of expansion in service sector activity and the fastest growth in three months, driven by a continuous rise in new business amid rapidly increasing demand in several Eurozone countries. Meanwhile, export-related businesses experienced only a slight decline. This expansion has also led to increased employment in the services sector. On the cost front, companies continue to face rising input costs and other expenses, but there are signs that these costs may soon begin to slow down.

Meanwhile, the Manufacturing PMI remained stable at 45.8 in August, indicating a continued contraction in the manufacturing sector. This reflects the impact of the ECB's tight monetary policy over the past year. Additionally, the sharp rise in energy prices earlier this year has led to continued increases in raw material costs and wages, contrary to the declining demand from abroad.

Inflation in the Eurozone fell to 2.2% in August from 2.6% in the previous month, in line with market expectations, showing progress toward the ECB’s inflation target of 2%. The decline in inflation was mainly due to a sharp drop in energy costs, which positively impacted several industries. However, inflation rose in the services sector, indicating robust activity, while inflation in the manufacturing sector shows signs of slowing down again.

Eurozone GDP grew by 0.2% in Q2, with a slight increase in government spending, while household consumption continues to show signs of contraction. This is due to rising daily living expenses and high borrowing costs, as interest rates have remained high for an extended period, prompting households to spend more cautiously. Meanwhile, Germany’s contracting GDP continues to exert downward pressure on the overall Eurozone economy.

Techical analysis data (5H)

Resistance: 0.9045, 0.9065, 0.9093

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.8969 - 0.8997 but cannot break the support at 0.8997, you may set a TP at approximately 0.9065 and SL at around 0.8949 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.9045 - 0.9065, you may set a TP at approximately 0.9093 and SL at around 0.8969 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.9045 - 0.9065 but cannot break the resistance at 0.9045, you may set a TP at approximately 0.8969 and SL at around 0.9093 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.8969 - 0.8997, you may set a TP at approximately 0.8949 and SL at around 0.9065 or according to your acceptable risk.

Pivot point September 6, 2024 09:45 PM. GMT+7