- The euro held steady around the $1.0815 support level, remaining below a four-month high of $1.094 hit on July 17, as fresh key economic data did little to change traders’ bets on a European Central Bank rate cut in September.
- According to the economic calendar results.
- The eurozone economy expanded at a faster-than-expected rate of 0.3% in the second quarter according to preliminary figures, led by growth in France, Italy and Spain, while the German economy contracted unexpectedly, reflecting continued weakness in the bloc’s largest economy.
Meanwhile, inflation in Spain fell more than expected to 2.8%, while inflation in Germany rose unexpectedly to 2.3%. Overall, investors continue to price in another 25-basis point cut in borrowing costs by the European Central Bank in September. The European Central Bank had left interest rates on hold as expected in July, with President Lagarde saying the September decision remained “wide open”.
Elsewhere, economic sentiment in the eurozone weakened. The eurozone economic sentiment index fell slightly to 95.8 in July 2024 from 95.9 the previous month, but ahead of market expectations of 95.4. However, the decline signaled the most pessimism in the eurozone economy since February, in line with the ECB’s decision to start easing monetary and fiscal restrictions in the currency bloc. Sentiment deteriorated for both industry (-10.5 vs. -10.2 in June) and services (4.8 vs. 6.2), while consumer pessimism eased (-13 vs. -14).
Meanwhile, eurozone services sentiment slowed more than expected. According to the report, the Eurozone services sentiment index fell to 4.8 in July 2024, below market expectations of 5.5, and down from a downwardly revised 6.2 in the previous month. The service providers’ assessment of the business situation over the past three months fell into negative territory (-0.5 vs. 2.4 in June) and expectations for demand for the next three months fell (9 vs. 10.8).
Furthermore, companies expect employment levels to continue to rise over the next three months, albeit at a slower rate (1.2 vs. 3.9), and expectations for selling prices fell (12.3 vs. 13.9).
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EUR/USD Technical analysis and forecast:
Our technical view on the performance of the EUR/USD price has not changed. The general trend remains bearish and breaking the 1.08 support will provide more strength for the bears to move further down. Accordingly, the next destinations could be 1.0720 and 1.0600, respectively. Accordingly, the technical indicators will then move to strong oversold levels. On the other hand, and at the same time frame, the daily chart will not witness a strong shift in the general trend to an upward trend without returning to the psychological resistance area of 1.1000. Both trends will depend on the reaction to the US Federal Reserve’s announcement and signals today, then the announcement of the US jobs numbers at the end of the week.
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