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Eurozone Economy Slowed Down in the Third Quarter

11/2/2022 11:43 AM

The European currency shows flat trading dynamics, consolidating near 0.9885.

Investors are in no hurry to open new trading positions, preferring to wait for the results of the two-day meeting of the US Federal Reserve, which are expected to give signals about the slowdown in further tightening of monetary policy. At the same time, the market expects that today the regulator will announce another interest rate hike by 75 basis points to 4.0%. In addition, the release of data from Automatic Data Processing (ADP) on Nonfarm Payrolls for October is expected, which precedes the publication of the final report on the US labor market at the end of this week.

Data on Trade Balance and Unemployment Rate will be published today in Germany. Current forecasts suggest that against the background of a sharp slowdown in exports from 1.6% to 0.1%, the trade surplus in September will decrease from 1.2 billion euros to 0.7 billion euros. The Unemployment Rate, according to expectations, will not change in October; however, the Unemployment Change is likely to increase from 14.0 thousand to 15.0 thousand. In addition, according to Eurostat, the economy of the European Union showed growth in the third quarter, and against the backdrop of estimates of Gross Domestic Product (GDP), a recession will not occur this year. In the second quarter, the indicator rose by 0.8% in the euro area and by 0.7% in the EU as a whole, but on an annualized basis in the third quarter it slowed down to 2.1%. The most difficult situation is noted in the economies of Latvia, Austria and Belgium, where GDP in the third quarter fell by 1.7%, 1.0% and 1.9% respectively. The day before, the President of the European Central Bank (ECB), Christine Lagarde, in an interview with the Delfi news agency, said that the regulator should continue to raise interest rates to fight inflation, even if the likelihood of a recession in the eurozone increases.

On the D1 chart, Bollinger Bands are gradually reversing horizontally. The price range is narrowing from below, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic retains a steady downtrend but is located in close proximity to its lows, which indicates the risks of oversold euro in the ultra-short term.

Resistance levels: 0.9900, 0.9950, 1.0000, 1.0050. | Support levels: 0.9850, 0.9800, 0.9750, 0.9666.

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