Source: PaxForex Premium Analytics Portal, Fundamental Insight
The German IFO Business Climate Index for March is predicted at 91.0, the German IFO Current Assessment Index at 94.1, and the German IFO Expectations Index at 88.3. Forex traders can compare this to the German IFO Business Climate Index for February, reported at 91.1, the German IFO Current Assessment Index at 93.9, and the German IFO Expectations Index at 88.5.
Eurozone M3 Money Supply for February is predicted to increase by 3.2% annualized. Forex traders can compare this to Eurozone M3 Money Supply for January, which increased by 3.5% annualized. Eurozone Private Sector Loans for February are predicted to rise by 3.6%, and Loans to Non-Financial Corporations by 5.8% annualized. Forex traders can compare this to Eurozone Private Sector Loans for January, which increased by 3.6% annualized, and Loans to Non-Financial Corporations, which rose by 6.1% annualized.
Traders will closely monitor speeches by German Bundesbank President Nagel and Bundesbank Member of the Executive Board Balz, especially after a spike in credit default swaps for Deutsche Bank last week, following the failure of Credit Suisse. Deutsche Bank, the fourth largest Forex trader by volume, is well-capitalized and does not face any known issues. The nervousness surrounding the global banking system, which started following the collapse of Silicon Valley Bank in the US, the second-largest bank failure in US history, is likely to dominate headlines.
First Citizens Bank agreed to purchase most of the remaining Silicon Valley Bank assets, which may only temporarily calm investors. The fallout of the Credit Suisse collapse and wipe-out of AT1 bondholders could pressure Eurozone banks. The risk for equity markets remains to the downside as economic uncertainty, bank issues, central bank monetary tightening, and inflation create massive headwinds.
The forecast for the Euro STOXX 50 remains bearish after this equity index reversed a false breakdown below its narrowing Ichimoku Kinko Hyo Cloud. Volatility could remain elevated, and short-term bullishness deflated, as shown by the flat Kijun-sen and Tenkan-sen. Traders should monitor the CCI after it plunged to a multi-week low in extreme oversold territory, followed by a double breakout. This technical indicator could reverse below zero as bullish factors recede, which could spark a renewed sell-off in price action with plenty of downside potential. Will bears overpower bulls and regain control over the Euro STOXX 50, forcing it into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the Euro STOXX 50 Index remain inside the or breakdown below the 4,140 to 4,190 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 4.170
- Take Profit Zone: 3.920 – 3,980
- Stop Loss Level: 4.245
Should price action for the Euro STOXX 50 Index breakout above 4,190, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 4.245
- Take Profit Zone: 4.270 – 4.310
- Stop Loss Level: 4.190
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