Skip to content EURUSD Fundamental Analysis – 6-September-2024
As September began, the Euro traded at around $1.1 (EUR/USD), maintaining low levels since mid-August. This dip comes as many traders expect the European Central Bank (ECB) to lower interest rates again in their upcoming meeting on September 12th.
The chances of this happening have grown after early data indicated a drop in inflation across the Eurozone. In August, inflation fell to 2.2%, marking the lowest rate since July 2021. Additionally, core inflation, excluding more volatile prices like energy and food, dropped to 2.8% following three months at 2.9%.
More Rate Cuts on the Horizon
Market analysts predict that the ECB might reduce borrowing costs two or three more times before the year ends. This move would boost economic growth and control the continuing drop in inflation.
Lowering rates makes borrowing more attractive for businesses and consumers, which can stimulate economic activity. However, it also can weaken a currency, which may be part of why the Euro remains at its lower levels.
Manufacturing Still Struggling
In addition to the inflation concerns, data from the Eurozone’s manufacturing sector isn’t looking positive either. The Purchasing Managers’ Index (PMI), which measures the health of the manufacturing industry, showed that the sector remained in decline throughout August.
The primary drivers of this weakness were the major economies of Germany and France, whose manufacturing activities were especially sluggish.
What This Means for the Eurozone’s Economy
With inflation dropping and manufacturing struggling, the Eurozone faces a tough road ahead. Lower interest rates can help ease these economic pressures, but how quickly these changes will take effect is still being determined.
For now, all eyes are on the ECB’s decisions in the coming months as traders brace for potential changes that could shape the future of the Euro and the region’s overall economic stability.
About The Author
Comments are closed.