The European Central Bank (ECB) is expected to consider another interest rate cut at its upcoming meeting.

The euro continues to weaken, nearing its lowest level in two years, as investors remain concerned about U.S. trade policies and eurozone inflation data. CNN reports that U.S. President Donald Trump, the president-elect, is considering declaring a national economic emergency to justify raising tariffs, with no indication of reducing tax plans in the future. Despite this, some analysts predict that the ECB will lower interest rates by another 25 basis points in the upcoming meeting.

The eurozone's Composite PMI slightly increased to 49.6 in December from 48.3 in November. While the services sector showed modest growth, manufacturing activity declined sharply, resulting in only slight overall growth. Major economies such as Germany, France, and Italy reported declining manufacturing activities, whereas Spain and Ireland experienced rapid growth in this sector. However, most countries faced continuous declines in new orders for the seventh consecutive month. This trend, coupled with weak domestic demand and exports, led to the fastest decline in employment in four years, primarily driven by layoffs in the manufacturing sector. Although the services sector saw a slight increase in hiring, rising cost pressures forced most companies to better control production costs.

Inflation in the eurozone rose to 2.4% year-on-year in December, marking the third consecutive monthly increase and the highest rate since July. This late-year inflation surge is believed to be driven by a low base effect from the previous year, as energy prices fell sharply last year. Energy prices increased by 0.1% for the first time since July. Meanwhile, inflation accelerated in the services sector at 4%, but remained stable for food and beverage categories. Among the eurozone's largest economies, inflation rose to 2.8% in Germany, 1.8% in France, and 2.8% in Spain. Core inflation, which excludes volatile food and energy prices, remained steady at 2.7%. The ECB expects inflation to return to its 2% target by the end of the year.

Unemployment in the eurozone remained at a record low of 6.3%, consistent with market expectations. The number of unemployed fell by 39,000 from the previous month, totaling 10.819 million. However, youth unemployment for those under 25 seeking jobs stood at 15% in November, the highest level since 2023. Among major eurozone economies, Spain had the highest unemployment rate at 11.2%, followed by France at 7.7%, and Italy at 5.7%. Conversely, Germany reported the lowest unemployment rate at 3.4%.

Household lending in the eurozone rose by 0.9% year-on-year to €6.918 trillion in November, marking another increase after a 0.8% rise in the previous month, reflecting growing household spending capacity, particularly in consumer goods. Meanwhile, lending to companies increased by 1%, reaching €5.162 trillion, down from 1.2% growth in October. However, signs of continuous growth in private sector credit remain evident. Overall private sector credit growth, which includes households and non-financial companies, slowed to 1.5% in November from 1.7% in October.

Techical analysis data (5H)

Resistance: 0.976, 0.9765, 0.977

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.9745 - 0.9751 but cannot break the support at 0.9751, you may set a TP at approximately 0.9765 and SL at around 0.9741 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.976 - 0.9765, you may set a TP at approximately 0.977 and SL at around 0.9745 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.976 - 0.9765 but cannot break the resistance at 0.976, you may set a TP at approximately 0.9745 and SL at around 0.977 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.9745 - 0.9751, you may set a TP at approximately 0.9741 and SL at around 0.9765 or according to your acceptable risk.

Pivot point January 10, 2025 09:05 PM. GMT+7