On Monday, the Paris Stock Exchange showed a negative sentiment, commencing a week filled with important monetary policy discussions. Notwithstanding this, investors exhibit a reluctance to establish significant obligations before the forthcoming Federal Reserve meeting, which is planned to commence for two days tomorrow.
Week Of Central Bank Meetings
Although prevailing sentiments point towards the Federal Reserve maintaining its present stance, market participants continue looking for signals regarding forthcoming interest rate modifications. Certain analysts expect that the central bank might increase its projections for economic growth and inflation, creating a possibility of an interest rate cut.
A strategist at Lombard Odier, Nanette Hechler-Fayd'herbe, warns that substantial asset price adjustments could result if the market anticipates fewer rate cuts or even starts pricing in rate increases.
The Bank of England (BoE) and the Swiss National Bank (SNB) also have meetings this week; neither institution is expected to adjust interest rates. Moreover, rumors indicate that the Bank of Japan (BoJ) might implement a change in stance regarding the normalization of its monetary policy—possibly by increasing borrowing costs and discontinuing negative interest rates.
Economic Releases For FRA40
Like other European markets, the Paris exchange has witnessed exceptional progress during the previous three months. Last week, an additional 1.7% surge was documented, establishing fresh record highs. The upward trend mentioned above has prompted analysts at Robeco to comment on the durability of equities in the eurozone in light of the current economic circumstances of stagnation and full employment.
Thursday's release of preliminary PMI indices for major European economies will attract the most investor interest. Peter van der Welle, a strategist, has acknowledged that a flourishing global manufacturing recovery could be economically advantageous for Europe.
FRA 40 (FRA40) Technical Analysis
In the daily chart of FRA40 index, the current trend is bullish, where the most recent price trades are bullish above the dynamic 50-day Exponential Moving Average level.
In the volume structure, the most active level is found at the 7269.50 level, which is below the current price. Moreover, the higher timeframe shows a stable market as the 200-day Simple Moving Average is below the 7600.00 static level with a bullish slope.
However, the ongoing buying pressure has reached the 161.8% Fibonacci Extension level from August 2023 high to November 2023 low, which might indicate a possible ceiling.
Based on the daily market outlook of FRA40, a bearish pressure with a daily close below the 7980.20 static level could be a bearish opportunity, targeting the 100-day SMA level. However, a minor downside correction to the 50-day EMA and a bullish reversal could be a trend continuation opportunity, targeting the 8500.00 psychological level.
