French President Emmanuel Macron will appear on TV later in the evening, with rumors spreading he is about to announce another hard lockdown in France. Another round of national lockdown will most likely lead to a fresh wave of bankruptcies among the cyclical sector. Thus, DAX and CAC are the worst performers today.
In its decline, the CAC index broke below previous lows of 4,680 EUR, which triggered a large number of stop-losses. Moreover, the breakdown below this level effectively switched the medium-term trend to bearish.
The next target for bears seems to be at 4,200 EUR from the medium-term perspective. Intraday, the index appears oversold, and a slight consolidation might occur during the US session.
The ECB meets tomorrow, and governors should announce a new stimulus sooner rather than later. That might calm down investors, and a possible rally might occur in that case. Till then, the sell-off could continue.
