Embarking on a rebound from a hesitant start to the year, the Euro Stoxx 50 Index Futures (EUREX: FESX) found its stride on Monday, spurred by fresh data emanating from the Eurozone. Noteworthy figures unfolded, as year-over-year retail sales came in at -1.1%, outperforming the anticipated -1.5% dip, while the month-over-month metric aligned precisely with market expectations at -0.3%. Economic sentiment surged from 94 to a robust 96.4, hitting a seven-month pinnacle.
Amidst these developments, the market exhibited a measured response, with technology stocks spearheading global equity gains leading up to Thursday’s US CPI report. Concurrently, oil and gas stocks experienced a dip in response to Saudi Arabia’s recent pronouncements of price cuts.
As we approach the next session, all eyes are on the impending unemployment rate announcement. The market consensus points to an unchanged figure at 6.5%, promising a keenly observed metric that could influence market dynamics.
Technical
On the 4H chart, the uptrend that carried the futures through the end of 2023 underwent a breakdown, with the 25-SMA (green line) offering the last line of support for a potential retracement. However, with volumes declining, the uptrend may have lost some steam, creating an intriguing environment in the upcoming sessions.
The breakdown could be sustained if the futures fall below the 25-SMA at 4,523. Support at 4,445 could then come into play before the 50-SMA (blue line) could pose a threat to the pairs near the support at 4,402. Movement below this level could confirm a longer-term shift in momentum, opening the door to a deeper decline toward 4,356.
On the other hand, if the sellers fail to shift the futures below the 25-SMA, a retracement of the recent breakdown could occur. This could see the futures looking to retest the psychological resistance at 4,619, where the uptrend previously faltered.
Summary
After a lacklustre start to the year, European shares look to rebound ahead of the pivotal US CPI report on Thursday. The 25-SMA could be a crucial level in the upcoming sessions to determine whether the recent trend reversal could be sustained.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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