The Euro lost ground against the greenback yesterday, despite the release of flat Eurozone consumer confidence index data for July. The US existing home sales data for June also missed estimates. However, the market is currently betting on a rate cut by the ECB (European Central Bank) in the September policy meeting. This keeps the Eurodollar slightly weak against the greenback, which is strengthening amidst global geopolitical uncertainty. Overall, the EUR/USD pair fell from a high of 1.0910 to a low of 1.0850 in the past 24 hours.
According to the data published by Eurostat, the Eurozone consumer confidence index improved to -13 in July from -14 in June, meeting analysts’ expectations. The reported figure reflects the highest level since February 2022.
Last month’s interest rate cut by the European Central Bank, prompted by a gradual deceleration in inflation, has increased the positive sentiment. Market participants are hopeful for additional rate cuts in September and also in December.
The US National Association of Realtors stated that prevailing home sales fell by 5.40% in June to 3.89 million units, from 4.11 million units in April, missing forecasts of 3.99 million.
The cumulative housing inventory was 1.32 million units in June, an increase of 3.10% from the previous month. On a y-o-y basis, the US total housing inventory surged 23.40% in June 2024. Unsold inventory was 4.10x monthly supply at the prevailing sales rate, an increase from 3.70x months in May.
Furthermore, the median existing home price was $426,900 in June 2024, up 4.10% from $410,100 in June 2023.
NAR Chief Economist Lawrence Yun noted a gradual transition from a seller’s market to a buyer’s market. He observed that homes remained on the market for longer periods, with sellers receiving fewer offers. Additionally, there is an increase in the number of buyers requesting home inspections and appraisals, and national inventory levels are definitively rising.
The Richmond manufacturing index worsened to -17 in July from -10 in June, disappointing economists who were expecting an improvement in the reading to -7.
The data published by the Federal Reserve Bank of Richmond further indicated that the decline in the fifth district manufacturing activity was caused by three component indexes, namely, shipments, new orders, and employment. While the shipments index fell to -21 in July from -9 in June, the new orders index decreased to -23 from -16 in the same period. The employment index inched down to -5 from -2.
The index reflecting local business conditions decreased to -21 from -13. Likewise, the index for future local business conditions inched down to 7 from 9.
The weak economic data from both the Eurozone and the US is expected to keep the EUR/USD pair range-bound in the short term.
The historical price chart indicates that the EUR/USD pair is descending after facing resistance at 1.0910. The next major support is anticipated to be only near 1.0800. Additionally, the currency pair is trading below its 50-day moving average, while the stochastic indicator is in the bearish zone. Therefore, we anticipate the EUR/USD pair to remain in a downtrend for the next few trading sessions.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
