European stocks declined on Thursday with a broad lack of positive news. (Pivot Orderbook analysis)

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• European stocks declined on Thursday with a broad lack of positive news.
• ECB’s Economic Bulletin begrudgingly admitted growth is set to decline.
• US CPI inflation rose higher than expected, slapping down market sentiment.

The pair currently trades last at 7587.38.

The previous day high was 7682.45 while the previous day low was 7643.48. The daily 38.2% Fib levels comes at 7658.37, expected to provide resistance. Similarly, the daily 61.8% fib level is at 7667.56, expected to provide resistance.

European equity indexes broadly tumbled into the close on Thursday as stock traders pulled back from a dovish-sounding European Central Bank (ECB) and US inflation threatening to tilt hotter once more, pushing out the likelihood of the Federal Reserve (Fed) getting bullied into a rate cut cycle sooner rather than later.

The ECB’s Economic Bulletin revealed little new information from the European Central Bank’s deliberations in December; the ECB remains committed to hinging their rate policy on inflation expectations, and remains determined to brand themselves as being data-dependent in lock-step with markets that continue to roil on a case-by-case basis as economic data gets released.

The ECB grudgingly admitted that growth is set to continue declining looking forward after a technical contraction in 2023’s third quarter, and 4Q is broadly expected to repeat the pattern. Despite flagging growth, the EU’s overall employment landscape remains firm with unemployment sticking to the low side, counter-intuitively hampering equity valuations as a tight labor market makes it harder for the ECB to justify moving interest rates.

European stocks added to Thursday’s declines after US Consumer Price Index (CPI) inflation figures broadly beat market forecasts, with December’s MoM CPI climbing from 0.1% to 0.3% versus the forecast 0.2%. Annualized US CPI also beat the market, ticking up from 3.1% to 3.4% and climbing over the expected 3.2%.

US CPI inflation climbs to 3.4% in December vs. 3.2% expected

YoY Core US CPI declined slightly from 4.0% to 3.9%, but failed to meet the median market forecast of 3.8%. With US inflation surprising to the upside, chances of the Fed beginning to cut rates in March are beginning to wane, despite money markets continuing to price in 67% odds of the first rate cut coming from Fed within the first quarter of 2024.

Germany’s DAX shed nearly 143 points on Thursday to close down 0.86% at €16,547.03, with France’s CAC 40 dropping a little under 39 points close at €7,387.62, down 0.52%. The STOXX600 pan-European index fell 3.65 points to end the trading day down 0.77% at €472.77.

The UK’s FTSE major equity index was the hardest-hit of the major indexes from the European continent, tumbling 0.98% and shedding a little over 75 points, wrapping up Thursday’s trading at £7,576.59.

London’s major FTSE 100 equity index saw steep declines on Thursday in a new worst single-day performance for 2024, tumbling from the day’s early peak of £7,696.43.

The FTSE’s near-term rough chop has given way to a quick plunge into fresh lows for the year-to-date, decisively shedding the £7,660 level as the index declines further from the 200-hour Simple Moving Average (SMA) near £7,700.

Thursday’s downside action saw the FTSE tap the 200-day SMA at £7,572 before a clean near-term rebound, but topside momentum remains limited in the overnight session.

Technical Levels: Supports and Resistances

EURUSD currently trading at 7587.38 at the time of writing. Pair opened at 7657.81 and is trading with a change of -0.92 % .

The pair is trading below its 20 Daily moving average @ 7677.44, above its 50 Daily moving average @ 7550.24 , above its 100 Daily moving average @ 7528.08 and above its 200 Daily moving average @ 7573.98

The previous day high was 7682.45 while the previous day low was 7643.48. The daily 38.2% Fib levels comes at 7658.37, expected to provide resistance. Similarly, the daily 61.8% fib level is at 7667.56, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 7640.04, 7622.28, 7601.07
• Pivot resistance is noted at 7679.01, 7700.22, 7717.98

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