European Stock Indices Decline Amid Political Uncertainty

FXOPEN:ESX50   Eurostoxx 50 Index (SX5E)
European Stock Indices Decline Amid Political Uncertainty

Today, the Eurostoxx 50 index (Europe 50 on FXOpen) has dropped below the early May minimum, reflecting escalating market concerns over the upcoming French elections, as reported by Reuters. Finance Minister Bruno Le Maire's acknowledgment that the current political crisis could evolve into a financial crisis has amplified fears, extending the political risk until June.

How long might this decline persist?

Fundamentally, statements from authorities could calm the markets.

From a technical analysis perspective, the Eurostoxx 50 index chart (Europe 50 on FXOpen) provides clearer insights:

→ Since February, the price has been in an upward trend (shown in blue), but this trend was broken in late May after bouncing off the lower boundary of the channel.

→ This breakdown has led to the formation of a downward trend (shown in red).

→ The lower boundary of the parallel descending channel around 4813 could potentially act as a level where the market finds support after the decline triggered by the political backdrop. However, a false breakout below the April minimum around 4830 cannot be ruled out.

Additionally, the price may find support:

→ Near the 50% Fibonacci retracement level of the bullish impulse A→B around 4760.

→ Around the psychological level of 4800.

On the contrary, resistance may be encountered near the median of the descending channel around 4940 during attempts at recovery.

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