-1691663537.png)
ECB Concerned Over Economic Prospects
In its latest economic bulletin released today, the ECB shared little in the way of optimism for the health of the eurozone economy. While the bank acknowledges that inflation is declining, it notes that CPI is still elevated and is expected to remain so for too long. Additionally, it notes that the near-term prospects for the eurozone economy have weakened as a result of softer domestic demand driven by higher inflation and tightening financial conditions.
Upward Inflation Risks Remain
Focusing on inflation, the ECB warned that there are still clear upside risks such as the potential for food and energy prices to rise again as a result of the ongoing conflict between Russia and Ukraine. Specifically, the ECB points to Russia pulling out of the Black Sea Grain Initiative and the impact that is having.
Global Activity Slowing
Outside of the eurozone, the bank notes that while global activity has remained resilient this year, recent data reflects a loss of momentum. Additionally, the bank expressed concern over the divergence between services and manufacturing sector performance in recent months which has been widening globally.
Overall, the tone of the report was fairly dim and points to downside EUR risks going forward linked to weaker growth prospects. Focus will now be on incoming inflation data as the market looks to gauge whether the bank will hike again in September or hold steady.
Technical Views
EURUSD
The correction lower in EURUSD has seen the market trading back below the 1.1126 level. However, the move has found support for now into a test of the rising trend line. While the trend line holds, the focus remains on a continuation higher and an eventual breakout towards the 1.1503 level.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.