The Post-ECB Turnaround of GER30 Brings it to Critical Technical Hurdles
GER30 Analysis
The European Central Banks paused its aggressive tightening cycle in October, in a watershed decision, after ten consecutive hikes amounting to 450 basis points. Although refraining from offering forward guidance, policymakers have hinted at peak rates, saying that current interest rates can help restore price stability, if "maintained for a sufficiently long duration" [1]. The poor state of the economy and the significant deceleration in inflation, with preliminary October CPI falling below 3%, could help officials stay on the sidelines.
This shift in the ECB's stance has helped GER30 into a turnaround over the past two weeks, trying to stop its three-month slump. It now tests the critical 38.2% Fibonacci of that drop and the 200Days EMA (blue line), which would bring the 16K mark in the spotlight, although fresh catalyst would be required for challenging it.
These levels however, along with the falling daily Ichimouku cloud and the October high, create a difficult technical path for the index , which can stop the recovery and renew pressures. Furthermore, the ECB's dovish shift is partly a result of Eurozone's economic slowdown. Germany in particular shrunk by 0.1% in the third quarter according to preliminary data and the IMF expects it contract by 0.5% this year [1]. There not much to cheer in this outlook, which could limit the positive effect of the monetary policy shift. As such, GER30 is in risk of sub-15,000 moves and a rejection of the 38.2% Fibonacci would create scope for a breach of 14,506.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 13 Nov 2023 https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.mp231026~6028cea576.en.html |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.