DAX 30 Trades Just A Few Points Away From Critical Level

2016-04-14 09:59:00 Alejandro Zambrano, Market Analyst

Talking Points

German DAX 30 trades just a few points away from its March high.
The final March estimate of Eurozone Consumer Price, published this morning, was revised higher to 0.0% YoY from -0.1% in Feb., and the -0.1% YoY expected.
U.S. CPI is on deck this afternoon and expected to rise by 1.1% YoY.

The German DAX 30 (CFD: GER30) was little changed at the time of writing. The index, which has risen sharply this week, was trading a few points below its March high of 10,118.

The March high is important as beyond this level; the next strong resistance level is the January 5 high of 10,400, followed by the December 29 high of 10,880.

Strong support was the April low of 9437, and beyond this level, the next strong support level is the February 24 low of 9123. The DAX 30 has been trading sideways between the April low and March high since March 2, much like the FTSE 100, which breached its March high two days ago.

The final March estimate of Eurozone Consumer Price, published this morning, was revised higher to 0.0% YoY from -0.1% YoY in February, and -0.1% YoY expected. Such low inflation could trouble the ECB, which lowered its key interest rate as recent as March 10, in an attempt to steer inflation higher. Historically, a softer monetary policy tends to have a more positive effect on the DAX 30.

The next potential market moving events are the U.S. Jobless Claims and U.S. Consumer Price Indexes, with the latter being expected to grab the limelight.

U.S. CPI is projected to rise by 1.1% YoY, while the Core reading is expected to increase by 2.3% YoY. This report is probably the most crucial of today as persistently strong core inflation may push the Fed to hike rates in 2016. If they were to go ahead and raise rates, then this may disrupt stock markets worldwide as firms are dependent on low-interest rates given the relative slow global economic growth. We do note that German 30 firms source most of their incomes from outside Germany.

Our forecasts for Q2 2016 are now live on the site. Download them for free.

DAX 30 | FXCM: GER30