Back to the OP topic, how will Airbus response to Boeing projects? I think the initiative is at Airbus, because I feel they can "force" Boeing into a new NB after all. Airbus has refrained from launching an aircraft carriers have been asking fo for a long timer: an evolutionary growth version of the A320.
The A321 is way (7m) bigger (40-50 seats), heavier and costlier than a A320. Thousands of A320 need to be replaced coming years, as well as thousands of 737-800's. They are the bulk of the active global fleets. The 737-800/-8 have the advantage over the A320 of being longer, about 2 rows. For airlines flying 5 FA cabins, those are "free"" extra seats.
If Airbus would launch:

a dedicated single class 31 inch pitch 200 seater,

slightly higher seat count than the 737-8 (without 28" pitch/ lavatories)

offer NEO's CFM and Pratt high BPR, quieter engine choice,

the XLR modifications

serious container cargo capability options,

build locally, in Europe, USA and China

easily capable to cross the Atlantic, fly to Hawai or India if required

offering long term flexibility and rest value (e.g. for cargo conversions)

at aggressive A320NEO + pricing
airlines would increasingly miss MAX unique selling points. And pressure Boeing to at least match the capabilities. .
source: keesjeThat would likely "force" Boeing into an all new (superior) narrow body design.
Meanwhile it would give Airbus the option to focus on a design in between an A322 and A350-900. Replacing the A300, A310, A330CEO, A330NEO and other WB's operating medium flights in various roles. EIS to be in the next decade.
PS. I've been promoting a stretched A320 Enhanced Performance (EP) for a long time

Henry made this one for me, long before the NEO was launched.
(high BPR, carbon bladed CFM56-9's 
)
http://2.bp.blogspot.com/_-Oqf_vOmanM/S ... A320EP.jpg,
viewtopic.php?t=392177Interestingly, later I found out that the A320 is a pretty much optimized, slimmed down aircraft. So an "easy" stretch / MTOW bump doesn't seem possible;
- A "simple" A320 stretch/payload for range version would really bite into range, to the extend that airlines won't like it. Same for runway performance.
- A "simple" A321 shrink would compromise efficiency too, because the heavier wing, gears etc. would be inherited while not being required.
By now, 2021, we have simplified, lighter flaps, an ACT replacing bigger fuel tank and various NEO, LR and XLR modifications. Probably Airbus could use some of those to create a "lean"and efficient A320Plus, rather than an overly capable, heavy SUV kind of A320.
My assumption is an "A320Plus" wouldn't be a "simple" stretch or shrink. But the market / A320 conversion potential would justify a more significant modification anyway. Even if only a third of the current A320 backlog gets converted to an A320Plus, that would probably justify the investment. Basically boosting value of the
existing backlog... and freeing up space for A220 growth.