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The EUROSTOXX 50 ends the week higher due to a great week for European shares, however, eurozone stocks and government bond prices fell after US jobs data came in above expectations.
Basically, the reason the index fell is that the strong jobs number is challenging hopes that the US Federal Reserve may start slowing the pace of its interest rate hikes.
The pan-European STOXX 600 plunged to a session low after the data and was last down 0.4%. The index is now set to continue it.
Euro zone government bond yields, which move inversely with prices, reversed earlier falls. Germany’s 10-year yield rose as much as 3 basis points on the day to 1.855%, having been down around 5 bps prior to the release.
The EURO STOXX 50 is worth watching closely as it can get the overall market mood in Europe. Plus, it is heavily speculated on by investors across Europe.
Basically, the EURO50 a stock index of Eurozone stocks designed by STOXX, an index provider owned by Deutsche Börse Group. The index is composed of 50 stocks from 11 countries in the Eurozone.
High levels of bearish sentiment are still being seen towards the EURO50, with some 60 percent of traders currently holding a bearish view towards the European stock composite.
This large bullish sentiment bias probably hints that we are not yet close to seeing strong downside and more gains are likely.
EURO50 Short-Term Technical Analysis
The EURO50 has formed an inverted head and shoulders pattern, and the neckline of the inverted shoulders pattern is only lit of if the current August high is broken.
According to technical analysis we could be close to see a big rejection of a breakthrough. And a final thrust lower could be on the cards towards 4,000.
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EURO50 Medium-Term Technical Analysis
The EURO50 is likely to head lower as it tests towards the 61.8 Fibonacci retracement of the yearly low to the recent all-time high for the index.
A break of the 3950 level could cause a 500-point shock to the downside, which would drive the index towards the 3550 area.
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