Industrial sector is reacting negatively to the ECB’s rate | 04 Julio 2023

04 Julio 2023, EUR/USD

EURUSD trading plan:

Euro zone manufacturing activity contracted faster than initially thought in June as persistent policy tightening by the European Central Bank squeezed finances, according to a survey which painted an increasingly gloomy outlook for industry. An index measuring output, which feeds into a composite PMI due that is seen as a good gauge of economic health, dropped to an eight-month low of 44.2 from 46.4. There is growing evidence that the capital-intensive industrial sector is reacting negatively to the ECB's interest rate hikes. In its battle to try and bring high inflation back to its 2% target the ECB has already added 400 basis points to key rates and is widely expected to add another 25 this month, hitting the spending power of indebted consumers and companies.

Investment idea: sell 1.0920 and take profit 1.0862.

David Johnson
Analyst of «FreshForex» company
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