- In their meeting on Thursday the European Central Bank (ECB) slashed GDP and inflation forecasts and shifted to a still more dovish stance, with a new round of monetary stimulus for banks.
- This unsettled European (and global) equity markets, saw a rush into safe haven Bunds (German Government Bonds) and saw a plunge in the Euro versus most major currencies.
- Here we focus on a more bearish tone for EURUSD and downside risks for the pan-European equity benchmark, the Euro STOXX 50.
EURUSD intermediate-term bearish shift
We have stressed in a February reports here that “we see an intermediate-term range theme as 1.1214 to 1.1570, BUT with risks for an intermediate-term bear shift below the lower level” and the post-ECB plunge through 1.1214 has seen an intermediate-term move to a bear trend.
Furthermore, this plunge below 1.1214 alongside prior negative forces from early march through various supports keeps risks lower for Friday.
- We see a downside bias for 1.1175/71; break here aims for 1.1143 and 1.1119.
- But above 1.1243 opens risk up to 1.1288.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 1.1119.
- Lower targets would be 1.1000 and 1.0839
- What Changes This? Above 1.1420 shifts the outlook back to neutral; above 1.1509 is needed for a bull theme.
4 Hour EUR/USD Chart
Euro STOXX 50 risk shift to the downside
A selloff through our 3306 support on Thursday to reject recent rebound activity and then break further notable supports at 3298/96, to damage the immediate bull theme and shift risks lower for Friday.
The mid-January surge above 3105 set an intermediate-term bull theme, BUT risk is growing to test 3258 for an intermediate-term shift to neutral.
- We see a downside bias for 3292; break here aims for 3281/80, then maybe key supports at 3265 and 3258.
- But above 3318/19 opens risk up to 3340.
Intermediate-term Outlook – Upside Risks: We see an upside risk for 3257.
- Higher targets would be 3306 and 3429.
- What Changes This? Below 3258 shifts the outlook back to neutral; through 3221 is needed for a bear theme.
4 Hour Chart