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DAX 30 Remains Bearish Ahead of Eurozone Inflation and GDP

DAX 30 Remains Bearish Ahead of Eurozone Inflation and GDP

Alejandro Zambrano, Market Analyst

Talking Points

  • This morning the DAX 30 trend remained bearish below the April 27 close price of 10,346.
  • The April 14 high of 10,110 is still a support level and followed by the psychological level of 10,000 and the April 18 low of 9906.
  • Eurozone unemployment, inflation, and GDP figures are on deck today. In addition, ECB Governing Council’s Weidmann speaks.

Yesterday, the DAX 30 (CFD: GER30) swiftly recuperated most of its losses as it found support when it reached the April 14 high of 10,110. However, it was not good enough, and this morning the trend remained bearish below the April 27 close price of 10,346. The trend is bearish below the April 27 closing price as it is a lower high in relation to last week’s high of 10,488. The price has also been creating lower lows since April 21 (Thursday of last week).

Today the April 14 high of 10,110 is still a support level and followed by the psychological level of 10,000 and the April 18 low of 9906. Near term, resistance levels are the April 27 close price of 10,346 and last week’s high of 10,448.

We note the April 18 low, mentioned above, is crucial for the trend in place since early April. On April 7 price bottomed out at 9437 and after a push to 10,110 (April 14 high), price created a new higher low (the April 18 low of 9906). On price trading below the April 18 low of 9906, the sequence of higher low since early April would end, leaving the price without a bullish bias. However, as long as the price trades above the April 18 low, the April trend will remain bullish and the price could potentially trend higher in the next few weeks.

Eurozone unemployment, inflation, and GDP figures are on deck today. In addition, ECB Governing Council’s Weidmann speaks. The inflation and GDP figures should draw most of the attention.

A Bloomberg News survey projects inflation to decline by 0.1% YoY and thereby matching the growth rate of last month. Low inflation forced the ECB to ease their monetary policy on March 10 and persistently low inflation could keep the monetary policy easier for longer, which may promote Eurozone economic growth.

Eurozone first quarter GDP is expected to increase by 1.4%, which is a slower pace that the 1.6% of the fourth quarter. In the recent decade, the DAX 30 has lead the Eurozone GDP growth rather than followed it. Nevertheless, a slightly higher than the expected GDP reading may exert some bullish bias to the DAX 30 while a slower than expected growth may have the opposite effect.

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

DAX 30 | CFD: GER30

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Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano

--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com

Contact and follow Alejandro on Twitter: @AlexFX00

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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