Amid heightened tensions in Eastern Europe and some concerning economic data out of Germany, the Eurozone’s largest economy, Europe exchange traded funds have been pulling back in recent weeks.

The FTSE 100, the U.K.’s benchmark index, is trading at six-month lows while France’s CAC 40 has dipped almost 5% in just the past month. Germany’s DAX dipped 2.3% last week after German factory orders fell the most in three years and Italy, the Eurozone’s fourth-largest economy, is in the midst of another recession.

Those factors and others are taking a toll on Europe ETFs, such as the iShares MSCI EMU ETF (NYSEArca: EZU). Technical signs are appearing that indicate EZU could be poised for more downside.

“Violation of this 2- year uptrend line has indicated that this rally is running out of steam. The current convergence of the 10 and 30-week moving averages is now alluding to a battle shaping up between the bulls and the bears. Note how the last crossing took place in Sep. 2012, setting the stage for rally to come,” said J. Beck Investments in reference to the EZU chart below.

Chart Courtesy: J. Beck Investments

Putting EZU’s weakness in fundamental terms is not difficult. France and Germany combine for over 61% of the ETF’s weight. Italy chimes in at 7.6%. Add Italy and Spain’s weights in EZU and the number is 19.2%, which is problematic at a time of weakness for PIIGS equities. [France ETF Could Lag Europe Rivals]

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