Market Digest: DAX 40 Slips on Geopolitical Stress as Investors Eye ECB Rate Decision

DAX 40 Market Outlook: Geopolitical Pressures Offset by Corporate Restructuring as Markets Brace for ECB Rate Decision

Stocks wrapped up the week on a mixed, with the DAX 40 (GER30) rising 0.2% on Friday supported by a major automotive rally led by Volkswagen's historic restructuring plan.

Source: Bloomberg

EUR/USD DIPS ON RATES

Despite Friday's minor bounce, the index finished the week down about 2% amid ongoing geopolitical stress and the anticipated upcoming interest rate hikes by the Federal Reserve and the European Central Bank.

In the forex or foreign exchange trading, the Euro or EURUSD pair dipped under $1.16 as a strong US employment report lifted the greenback and strengthened bets on stricter Federal Reserve monetary policy.

But all are shifting back to Europe as markets fully price in a 25-basis-point rate hike at the upcoming European Central Bank's September 10 meeting, even as stronger-than-expected German factory orders offer a bit of localized economic relief while this week the country will disclose their industrial production and exports figures.

DAX Top Leaders and Top Laggers

Source: Barron's

EUROZONE INFLATION

Since Euro Area’s inflation recently surged to 3.3%, markets monitor the level of energy costs that will likely force the European Central Bank to raise interest rates also, trade tensions and interest rates pressure industrials, utilities protect stocks.

KEY DRIVERS TO PRICE MOVEMENTS

Economic Calendar

1. Sep 7- Germany’s Industrial Production
2. Sep 8- Germanys’ Balance of Trade
3. Sep 9- Eurozone European Central Bank Interest Rate Decision

The global macroeconomic indicator is centered on US Consumer Price Index with high U.S. inflation data’s influence raises European borrowing costs and stock prices.

Source: Finlogix

TECHNICALS ON GERMAN INDEX

Below the Daily Chart

Source: ACY MetaTrader 5

Below the 1H Chart

Source: ACY MetaTrader 5

1. Resistance This week the 26600 as the maximum resistance to test and such any expectation that the European Central Bank would likely to have fresh tone to support the currency and lessen the impact from energy prices.
2. Support 25835 as the price region for the week and historically as the price level where EURUSD stayed at 1.14 in July.
3. Relative Strength Index flat at 44 region and Bollinger Bands testing to break the 25800 region though by looking at the structure based on weekly and daily charts showing bullish to neutral in the short and medium term with a rising trend channel while 1H chart illustrates, following an aggressive upward breakout earlier in the week, price has shifted exhibiting a consolidation pattern.

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