The Eurozone economy is currently experiencing a downturn.

The value of the euro has depreciated slightly in the past few days, which is believed to be a result of a technical recession. Additionally, surveys have shown that business expansion in the Eurozone has almost stalled in June. Both the manufacturing sector, indicated by the PMI (Purchasing Managers' Index), and the services sector have seen a significant slowdown.

The manufacturing PMI has decreased by 1.2 points from the previous month to 43.6, while market expectations were at 44.8. This decline is expected to be driven by high borrowing costs and continuous decline in sales. Although there have been some increases in the PMI in certain months over the past year, when compared to the end of 2019, the trend shows a continuous decline. There are currently no positive factors that suggest a quick turnaround in the near future.

Regarding the services sector, the PMI has declined by 1.7 points from the previous month to 52.4, while market expectations were at 54.5. Although the services PMI has been consistently increasing since the end of the previous year, the growth has not been strong enough to significantly improve the overall economy. Furthermore, business confidence has reached its lowest level in six months.

S&P Global has stated that the business activity expansion in the Eurozone has almost come to a halt in June, indicating a new weakness in the Eurozone economy after a temporary expansion during the spring season.

Turning to the United States, S&P Global has revealed that the composite PMI index for both the manufacturing and services sectors in the country declined to 53.0 in June, marking the lowest level since March, down from 54.3 in May.

The services PMI stood at 52.4 in June, dropping from 55.1 in May, below the expected level of 54.5. The manufacturing PMI decreased to 43.6 from 44.8 in May, falling short of expectations. This is the lowest level since May 2020.

Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented, "After the Eurozone GDP contracted for the second consecutive quarter, it is possible that the change in GDP will signal another negative trend this quarter."

Investors are also closely watching remarks by Jerome Powell, the Fed Chair, regarding monetary policy. The European Central Bank (ECB) held a meeting in Sintra, Portugal, on Wednesday, June 28, to discuss monetary policy. Additionally, a financial stability event hosted by the Bank of Spain took place in Madrid on Thursday, June 29.

Technical analysis data (5H)

Resistance: 0.9169, 0.9183, 0.9195

Support: 0.9142, 0.9131, 0.9116

Source: Investing.com