Two trades to watch: DAX, EUR/GBP
Fiona Cincotta October 1, 2021 6:57 PM
DAX declines as the market mood sours and German retail sales disappoint. EURGBP is on the rise ahead of EZ CPI, & EZ, UK manufacturing PMIs.
DAX declines as market mood sours, German retail sales disappoint
The DAX along with other European indices are set for strong declines on the open, following on from a heavy selloff on Wall Street. Risk sentiment soured amid growing concerns that inflation could remain stubbornly high even as global growth slows.
Yesterday data revealed that German inflation rose to a 29 year high of 4.1%
German retail sales rebound but by less than expected. Sales rose 1.1% MoM in August, after crashing -5.1% in July. On an annual basis sales rose 0.4% in August, up from -0.3% in July but still well short of the 1.9% forecast.
German manufacturing PMI data is due and is expected to reveal a cooling in activity growth to 58.5 in September, down from 62.6.Learn more about Dax
Where next for the Dax?
The DAX is extending declines after being rejected at the falling trendline resistance earlier in the week. The RSI is pointing to further downside whilst it remains out of overbought territory.
Immediate support can be seen at 15030 the 200 sma and the September low. A break below here could open the door to 14800 the May low and 14650 the May low.
Any recovery would need to retake 15470 yesterday’s high before aiming for 15670 the confluence of the 50 sma and the descending trendline line resistance. It would take a move above this level to negate the near term down trend.
EUR/GBP looks to inflation data
The Pound’s strength from the previous session following a Q2 GDP upward revision, was short lived. Concerns over supply chain bottlenecks, labour shortages, and empty petrol stations continue to weigh on the Pound.
The Euro is pushing higher despite weaker than forecast German retail sales, supported by the prospect of the ECB acting sooner rather than later to taper support after German inflation hit a 29 year high.
Eurozone inflation is expected to rise to 3.3%, up from 3%, core CPI is expected to rise to 1.9%, up from 1.6%.Learn more about the Euro
Where next for EUR/GBP?
EURGBP extended its rebound off the rising trendline support, running into resistance at the 200 sma before easing lower.
The bullish MACD keeps bulls hopeful of a move above horizontal support at 0.8612 to expose the 200 sma at 0.8640.
It would take a move below the 50 sma at 0.8550 to negate the near term up trend and a move below 0.85 the September low for sellers to gain traction.
How to trade with City Index
Follow these easy steps to start trading with City Index today:
- Open a City Index account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels
- Place the trade.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.