Eurozone inflation continues to decline.

The euro continues to strengthen, reaching its highest level since 2021. This rise has been supported by the weakening of the US dollar amid growing concerns over the independence of the Federal Reserve (Fed). These concerns emerged following comments from President Trump and the Director of the U.S. National Economic Council, with speculation that Trump might remove Jerome Powell, the current Fed Chairman. There is a possibility of pressure on the Fed to accelerate interest rate cuts to support the U.S. economy. Meanwhile, trade negotiations between the U.S. and other countries on tariffs are still ongoing.

In addition, investors are increasingly questioning the dominance of the dollar in the global financial system and are turning to alternative currencies. The euro has also received further support from expectations of increased defense spending, particularly in Germany. On the monetary policy front, the European Central Bank (ECB) has cut interest rates by 25 basis points. The central bank has also warned that the economy may worsen due to escalating trade tensions. Investors now expect the ECB to cut interest rates three more times this year.

The ECB's 25 bps rate cut was in line with market expectations. This decision reflects the central bank’s growing confidence that inflation is sustainably returning to its 2% target. Both headline and core inflation continue to trend downward. Inflation in the services sector has also declined. Meanwhile, wage growth is slowing, and companies are bearing some of the cost burden. However, risks to the eurozone outlook remain, especially from increasing global trade tensions, which are affecting confidence and tightening financial conditions.

Furthermore, ECB President Christine Lagarde has warned that the impact of rising tariffs could nearly halve eurozone growth this year, reducing it from a previously forecasted 0.9%. A stronger euro, falling oil prices, and weakening consumer confidence are all putting downward pressure on inflation. Although the 90-day pause in retaliatory tariffs between the EU and the U.S. offers temporary relief, the ECB remains concerned about the broader impacts on investment and trade. As a result, the ECB has refrained from committing to further rate cuts but emphasized that future decisions will depend on incoming economic data and the strength of monetary policy transmission.

Eurozone inflation slowed to 2.2% year-on-year in March, down from 2.3% in February, consistent with preliminary estimates. Energy prices fell again, dropping 1% after a slight increase previously. At the same time, service sector inflation eased slightly to 3.5% from 3.7%. Among the eurozone’s major economies, inflation declined in Germany, Spain, and the Netherlands but accelerated slightly in Italy. Core inflation, which excludes volatile food and energy prices, fell to 2.4%, the lowest level since 2021, down from 2.6% the previous month.

Techical analysis data (5H)

Resistance: 0.8718, 0.8734, 0.8763

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 0.8644 - 0.8672 but cannot break the support at 0.8672, you may set a TP at approximately 0.8734 and SL at around 0.8627 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 0.8718 - 0.8734, you may set a TP at approximately 0.8763 and SL at around 0.8644 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 0.8718 - 0.8734 but cannot break the resistance at 0.8718, you may set a TP at approximately 0.8644 and SL at around 0.8763 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 0.8644 - 0.8672, you may set a TP at approximately 0.8627 and SL at around 0.8734 or according to your acceptable risk.

Pivot point April 22, 2025 10:10 PM. GMT+7