For the second time in March, European stock markets are heading south in the wake of the Fed’s dovish turn, something that could provide Support to the stocks.
The Fed kept rates unchanged as expected, however it lowered the boom on its policy path, flattening the “dot plot” aggressively to a leave zero median for 2019 tightenings, arguing that a state of patient semi-neutrality was the best approach after some cooling in growth and inflation. The Fed revised 2019 inflation lower, and said it will end its balance sheet reduction in October.
Stock markets continue to be mostly lower so far today, with the prospect of a cautious Fed not helping sentiment so far, as the dovish turns at central banks also fuel concerns that the outlook for the global economy is worse than feared. Brexit jitters also don’t help.
The GER30 has lost a further -0.51% so far today, after already underperforming yesterday, as further pressure has been added to it following the ECB’s March economic bulletin, which highlighted once again a weaker growth outlook.
GER30 triggered our attention following yesterday’s decline as it continues to be negatively configured so far today, holding around 20-day SMA. This performance raised concerns around the 4-month bullish outlook of GER30.
The uptrend since the December rebound still holds, with the risk coming on a setback below the 11,480 Support which is set at FE127.2 on March’s jump (as shown in the chart). Meanwhile, significant support could be identified between 11,387- 11,406 (daily lower Bollinger Bands level but also March’s low and the confluence of 50-day EMA and FE161.8).
Both RSI and MACD remain positive after flicking lower, but they have flattened, suggesting consolidation in the medium picture. Hence with the price action trading above the latter Support, the positive sentiment is not threatened. However if bears manage to shift below it, this could open the doors towards 11,100-11,200 area.
Meanwhile, in the 1-hour chart, the asset could find Support at latest low (11,532) and if this is decisively broken there could be a retest to 11,480 level.
On the flipside, a breach and break above the mid of the 3-day decline, at 11,678, could turn the outlook positive and could turn the attention towards the 11,824 peak again.
Click here to access the Economic Calendar
Andria Pichidi
Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
