The Eurozone's growth sign remains unclear.

The euro has stabilized after three consecutive weeks of weakening, as investors brace for potential currency volatility ahead of Germany’s general election on Sunday and assess the latest Purchasing Managers' Index (PMI) data. Polls suggest that the conservative bloc, led by Friedrich Merz, is likely to win the election but will need coalition partners to form a government amid ongoing economic stagnation. Economic data from the Eurozone shows only slight growth in private sector activity, signaling a potential further slowdown after the release of Q4 GDP data last week.

However, investor sentiment remains cautious due to ongoing geopolitical tensions, particularly after the United States signaled plans to reduce its support for Ukraine while engaging in negotiations with Russia, excluding Ukraine and Europe from the talks. Additionally, former President Trump is expected to impose a 25% import tariff on cars, semiconductors, and pharmaceuticals starting April 2, which could significantly impact European manufacturers and put pressure on countries with large trade surpluses with the U.S.

The Eurozone’s services PMI fell to 50.7 in February, its lowest level in three months, down from 51.3 in January. While this still reflects three consecutive months of expansion, the weak growth rate signals sluggish momentum, with new business declining for the first time in three months, despite a slight uptick in employment. On the production side, costs continue to rise rapidly at a pace similar to January.

The manufacturing PMI, on the other hand, rose to 47.3 in February from 46.6 in January. This reflects a continued slowdown in the manufacturing sector for the ninth consecutive month, as production trends downward. This has led to a significant reduction in manufacturing employment. Companies across the Eurozone have also cut back on purchasing in response to persistently weak customer demand. Production costs increased for the second month in a row, reaching their fastest growth rate in six months, leading to a slight increase in selling prices.

Consumer confidence rose by 0.6 points to -13.6 in February, marking a four-month high. Reports suggest that consumers remain optimistic that the European Central Bank (ECB) will continue cutting interest rates this year. Expectations indicate a possible 25-basis-point rate cut over the next three meetings, with rates potentially falling below 2% by 2026. This optimism stems from inflation rates not rising significantly and household spending power remaining stable.

The Eurozone’s trade surplus decreased to €15.5 billion in December, down from €16.4 billion a year earlier but still above market expectations of €14.4 billion. Imports rose by 3.8% year-over-year to €211 billion, mainly driven by machinery and automotive products. Exports grew by only 3.1% to €226.5 billion, led by sales of chemicals and related products.

Techical analysis data (5H)

Resistance: 0.9567, 0.9581, 0.9593

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.9529 - 0.957 but cannot break the support at 0.957, you may set a TP at approximately 0.9581 and SL at around 0.9514 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.9567 - 0.9581, you may set a TP at approximately 0.9593 and SL at around 0.9529 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.9567 - 0.9581 but cannot break the resistance at 0.9567, you may set a TP at approximately 0.9529 and SL at around 0.9593 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.9529 - 0.957, you may set a TP at approximately 0.9514 and SL at around 0.9581 or according to your acceptable risk.

Pivot point  February 21, 2025 10:30 PM. GMT+7