OUTLOOK: Price Signal Summary - EUROSTOXX50 Futures Bull Cycle Remains Intact

You are invited to listen to a Livestreamed MNI Connect Video Conference with Luis de Guindos, the Vice-President of the European Central Bank.

Details below:

• Speaker: Luis de Guindos, Vice-President of the European Central Bank
• Topic of discussion: 'Euro Area Growth and Inflation Outlook.'
• Date: Thursday 18 September, 9am-10:30am London time
• This event is on the record and will run as a Zoom Webinar

To register please go to: MNI Webcast Registration

• Following the August MPC meeting, Deutsche Bank had looked for the next cut in Q4-25 but had been 50/50 between November and December. It has now firmed up its call and looks for a 25bp cut in December for four reasons: a later Budget, more data available by December, pay settlement data being clearer by December and with Governor Bailey not pushing back on further rate cut timing at the TSC last week. Indeed, Deustche Bank notes that "with the August decision being 'finely balanced' the Governor may be more inclined to wait until year-end before pulling the trigger on another rate cut, bridging some of the gap within the MPC."
• Deutsche Bank does note that November isn't completely off the table and there is still a "decent risk that the MPC sticks to its pace of quarterly rate cuts – at least until it gets to the very top end of Bank staff’s neutral rate estimations (2.25% - 3.75%)." It also notes that if there is more pronounced weakness in labour market data before November or in the DMP survey it "could also shift the odds back towards November."

• In the equity space, a bull cycle in S&P E-Minis remains intact and the latest pullback has once again proved to be a shallow correction. The contract traded to a fresh cycle high last week, breaching the Aug 28 high of 6523.00. This confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Sights are on 6543.75 next, a 2.00 projection of the Apr 7 - 10 - 21 price swing. Initial support to watch is 6447.06, the 20-day EMA.
• A corrective bear cycle in EUROSTOXX 50 futures remains in play. Recent weakness resulted in a breach of 5368.74, the 50-day EMA. The clear break of this average strengthens a short-term bearish threat and signals scope for a deeper retracement towards 5166.00, the Aug 1 low and a key support. On the upside, initial resistance to watch is 5378.06, the 20-day EMA. A clear break of it would be a bullish development.