Bears are back on the charts a few days after the central bank meeting.
After last week's ECB meeting, which was much more hawkish than expected, with Mrs. Lagarde's state about inflation, interest rate, and the need to raise rates, Euro got more vital, and European stocks experienced some pressure on their prices.
After Thursday's ECB meeting, we had the inflation numbers last Friday. Final Eurozone inflation enhanced concerns. Final EU CPI has corrected to 10.1% annually in November, up from an earlier flash estimate of 10.0%. On the other hand, Flash Manufacturing and Services PMI for the Eurozone exceeded expectations last week to confirm that ECB can continue the hawkish tone and stance, further bolstering the Euro, but not the Eurozone stocks.
In addition, the EU GDP for Q3 of 2022 exceeded expectations by 0.3% growth compared with 0.2% predictions. On the other hand, while ECB updated its economic growth to 3.4% in 2022, 0.5% in 2023, 1.9% in 2024, and 1.8% in 2025, while they are lower than previous estimates, which indicates that Eurozone economic outlook is poor if ECB continues its rate hike policy, then the recession will be undeniable fact, which means more pressures on both stock markets and common currency.
From the technical point of view, as we can see, the Euro closed higher last week, but a few days after the central bank meeting, bears are back on the charts. If the EURUSD declines, the next support will be found around 1.045 and then 1.030. On the flip side, if it trades steadily above the 1.06 level, bulls can lead the markets towards 1.061 and higher around 1.078 as its next target.
