Morning Note: ECB Rate Cut Expected; Broadcom Earnings; Oil Falls on Supply

Markets Eye ECB Rate Cut to 2.15%

The European Central Bank's last interest rate decision set the benchmark at 2.4%. Market expectations suggest a potential rate cut to 2.15% at the upcoming meeting. This data is set to be released today at 12:15 GMT. The anticipated cut in the ECB's interest rate from 2.4% to 2.15% is largely driven by signs of easing inflationary pressures across the eurozone. Core inflation has steadily declined, and headline CPI readings are moving closer to the ECB’s 2% target, reducing the urgency to maintain restrictive monetary policy.

Additionally, sluggish economic growth and weakening credit demand suggest that high borrowing costs are dampening investment and consumption, prompting the ECB to consider a more accommodative stance to support recovery. Furthermore, financial markets have already priced in a dovish pivot, as evidenced by falling eurozone bond yields. Thus, the expected rate cut to 2.15% reflects a balancing act between anchoring inflation expectations and reviving economic momentum.

(EUR/JPY Daily Chart, Source: Trading View)

From a technical analysis perspective, the EUR/JPY currency pair has been in a bullish trend since March 2025, characterised by a series of higher highs and higher lows. Recently, the pair faced rejection from the resistance zone at 164.55 – 165.05, where bearish pressure pushed it lower. However, it found support at the ascending trend line, formed a higher low, and resumed its upward movement with strong bullish momentum. This valid bullish structure suggests that the pair may potentially continue rising to retest the resistance zone of 164.55 – 165.05.

Broadcom Eyes Strong Q2 on AI Surge

Broadcom (AVGO) is scheduled to release its fiscal second-quarter 2025 earnings results today after the market closes. The company has projected revenues of $14.9 billion for the quarter, reflecting a 19.5% increase compared to the same quarter last year. Meanwhile, the consensus estimate for earnings per share is $1.57, implying a strong year-over-year growth of 42.73%.

The company's performance in the upcoming report is expected to be driven by its growing portfolio of AI-related products. Broadcom’s AI revenues are projected to surge 44% year-over-year to reach $4.1 billion. This growth is likely fueled by continued investments from hyperscale partners in high-performance accelerators and AI-focused data centres, which have increasingly contributed to Broadcom’s revenue expansion.

(Broadcom Daily Share Price Chart, Source: Trading View)

From a technical analysis perspective, Broadcom’s share price has been in a bullish trend since early April 2025, rebounding from the support zone of 136 – 140 and forming a pattern of higher highs and higher lows. Recently, the price broke above the resistance zone of 246 – 250 with strong bullish momentum. This valid breakout could potentially lead the price to further surge upwards.

Crude Oil Falls as Saudi Pushes for Oil Boost

Crude oil futures dipped below $63 per barrel during Thursday’s Asian trading session, extending losses from the previous day amid growing fears of a global oil oversupply. A key driver of this sentiment is Saudi Arabia’s push to ramp up OPEC+ production, proposing an increase of at least 411,000 barrels per day in August and potentially more in September, to secure a larger market share during the peak summer demand season.

Although official U.S. data showed a drop in crude oil inventories, this was offset by a larger-than-expected build in gasoline and distillate stockpiles, putting further pressure on prices. Additionally, investor sentiment remains fragile as concerns mount over the broader economic impact of ongoing trade tensions. Canada is preparing possible retaliatory measures, while the European Union has reported progress in negotiations, keeping markets on edge.

(Crude Oil Futures Daily Chart, Source: Trading View)

From a technical analysis perspective, crude oil futures have rebounded from the support zone of 55.30 – 56.10 since early May 2025, moved higher but faced multiple rejections at the resistance zone of 63.20 – 63.80. Currently, the price is oscillating between the swap zone of 59.50 – 60.30 and the resistance zone of 63.20 – 63.80. A decisive break of either zone could potentially lead the price to move in that direction.

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