The ECB needs to consider additional data before making its next rate cut decision.

The euro has weakened to its lowest level in two months, pressured by the continued strength of the US dollar. Furthermore, the euro has faced additional pressure from the recent interest rate cut by the European Central Bank (ECB), which has widened the interest rate differential between the US and the Eurozone. Meanwhile, investors still believe that the US Federal Reserve (Fed) will not cut interest rates anytime soon due to stronger-than-expected economic performance, which would further pressure the euro.

Although investors expect that the Fed will not cut interest rates in November, the previous meeting indicated that the Fed officials are leaning towards a more accommodative monetary policy due to the slowdown in interest rate increases and the consistent rise in unemployment. Additionally, almost all policymakers expressed confidence that inflation would drop to 2% and hinted that there could be up to 100 basis points of rate cuts by the end of the year.

The ECB may decide to cut interest rates again in the upcoming meeting. Policymakers still believe that inflation will return to the target by the end of 2025. However, the global economic slowdown, coupled with persistently high core inflation, may require more careful consideration before making further rate cuts. On the other hand, if the Eurozone economy shows signs of severe slowdown, a quicker rate cut may be necessary. Nonetheless, policymakers emphasize that they will consider economic data and discuss the situation at each meeting without committing to a specific timeline for rate cuts.

Retail sales in the Eurozone increased by 0.2% from the previous month in August, in line with market expectations, as fuel sales for vehicles rebounded slightly. Meanwhile, sales of food and beverages rose modestly, indicating improved financial resilience of households following the previous rate cut.

The Eurozone's services PMI was revised up to 51.4 in September, indicating slight growth in the services sector, which marked the weakest expansion in seven months. Although new orders did not rise significantly, the existing backlog of work has supported ongoing economic activity. In terms of employment, the services sector added jobs rapidly, while input costs grew at a slower rate, contributing to a recovery in business confidence.

Techical analysis data (5H)

Resistance: 0.9157, 0.9165, 0.9179

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.9121 - 0.9135 but cannot break the support at 0.9135, you may set a TP at approximately 0.9165 and SL at around 0.9113 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.9157 - 0.9165, you may set a TP at approximately 0.9179 and SL at around 0.9121 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.9157 - 0.9165 but cannot break the resistance at 0.9157, you may set a TP at approximately 0.9121 and SL at around 0.9179 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.9121 - 0.9135, you may set a TP at approximately 0.9113 and SL at around 0.9165 or according to your acceptable risk.

Pivot point October 11, 2024 09:25 PM. GMT+7