GER30 Posted its Worst Week in 3 Months, Brought Down by a Hawkish ECB
GER30 Analysis
In line with other major central banks, the ECB slowed down the pace of tightening on Thursday, with a 50 basis points rate increase, climbing down from two straight 0.75% moves. However, President Lagarde offered very aggressive commentary and out-hawked Chair Powell and the Fed.
She said that the bank is looking to raise interest rates "at a 50-basis-point pace for a period of time", in order to restore price stability, which suggests potentially more than one such moves. This stance is pursued in spite of the projection of a recession at the turn of the year and the lowering of the 2023 GDP forecast to a weak 0.5%. [1]
The hawkish guidance and the grim economic projections were detrimental to GER30, which posted its worst week since mid-September. This makes it vulnerable to the 38.2% Fibonacci of the October low/December high advance (13,577), although a steeper decline towards 13,011-12,896 does not look easy yet.
One the other hand, GER30 finds support today and may find the opportunity to rebound above 14,335. However, a significant improvement in sentiment will be required for fresh multi-month highs towards 14,960 and beyond.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 22 Mar 2023 https://www.ecb.europa.eu/press/pressconf/2022/html/ecb.is221215~197ac630ae.en.html |
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