- Eurozone manufacturing activity fell last month.
- The ECB is expected to raise rates in response to the 9.1% inflation rate.
- Eurozone unemployment fell to 6.6% in July.
Today’s EUR/USD price analysis is bearish. According to a survey released Thursday, manufacturing activity in the Eurozone fell again last month as consumers reined in spending due to the rising cost of living. This report is another proof of the increasing probability of a recession.
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The negative survey comes a week before the European Central Bank is anticipated to increase borrowing prices once more to control inflation, which is currently running at 9.1% – more than four times its 2% objective – further harming consumers who are already in debt.
The manufacturing Purchasing Managers’ Index (PMI) from S&P Global fell to 49.6 in August from 49.8 in July, below a preliminary reading of 49.7 and even lower than the 50-point threshold between expansion and contraction.
“Recession challenges are growing as economies continue to face drawbacks from high inflation, growing uncertainties, and rising interest rates,” said Thomas Rinn, global industrial lead at Accenture.
According to official data released earlier on Thursday and as predicted by a Reuters poll, the unemployment rate in the bloc decreased slightly in July from 6.7% to 6.6%. However, the good news about the labor market may not last.
“The fall in the eurozone unemployment rate in July to a record low of 6.6% is likely to be as good as it gets. The region faces a difficult winter, and recession looms,” said Jessica Hinds at Capital Economics.
EUR/USD key events today
All eyes will be on the US jobs report coming out later today. This report will give guidance on the next steps the Federal Reserve might take regarding interest rates.
EUR/USD technical price analysis: Price hanging around the 30-SMA
Looking at the 4-hour chart, we see the price consolidating and chopping through the 30-SMA. The price is caught between resistance at 1.00507 and support at 0.99003. There is indecision in the market, and neither the bears nor bulls are ready to commit and take the price beyond this range area.
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The RSI, trading below 50, shows bears are in charge at the moment and might attempt to go below the range support. A break below 0.99003 could mean lower prices.
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Saqib Iqbal
