ECB's Rehn: Data Shows First Signs of Stagflation Shock

Despite the RSI being in oversold territory at 20.6, EURUSD may face increased short-term pressure as ECB member Rehn signals stagflation risks. The price remains below the 20- and 50-day moving averages, and the MACD is generating a sell signal. Stagflation concerns could strengthen expectations of an interest rate cut in the Eurozone, potentially weakening the euro. However, the oversold condition also raises the possibility of a technical correction. The short-term downtrend may persist, but the 1.1680 level should be monitored as a support.

ECB member Rehn’s warning of a stagflation shock may amplify recession and inflation worries in the markets, potentially dampening risk appetite. The DAX index has already fallen more than 1%, with an RSI of 43 indicating a weak zone and a negative MACD trend. Prices are trading below both the 20‑day and 50‑day moving averages, casting a negative short‑term outlook. The uncertainty generated by the news could sustain the index’s current downtrend. However, since the oversold region has not yet been breached, the pace of the decline may remain limited.

The statement by ECB member Rehn that he has observed the first indications of a stagflation shock is adding to uncertainty across the euro area. The CAC 40 fell 1.87 % in the last 24 hours and is trading below its 20‑day simple moving average. Technical indicators show an RSI of 31.6 and a negative MACD, supporting short‑term selling pressure. Investors may raise risk perception, particularly for European companies. Consequently, a modest decline over the next one to three days is expected for the index.

The ECB member Rehn’s indication of a stagflation shock could introduce short‑term uncertainty in the markets. BP’s price rose 1.2% within 24 hours, with an RSI of 51.8 placing it near a neutral zone. The MACD sits above its signal line, signalling short‑term buying pressure, yet the price remains above the SMA20 but below the SMA50, indicating a choppy environment. A modest upward move is expected, but volatility could increase as economic data clarifies. Consequently, the direction may remain unclear over a 1‑3 day horizon, with a slight bullish bias anticipated.