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What happens to DAX exporters when the Euro gets stronger?
FUNDAMENTALS
Despite strong export statistics, the German industry was hindered by low construction data, with an industrial miss of -0.3% compared to the 0.7% forecast. We anticipate optimistic findings from the CPI (Consumer Price Index) on April 10, the WPI (Wholesale Price Index) on April 14, and the ZEW Economic Sentiment on April 21 in the upcoming days. With this information, we can observe that the DAX-proven Energy sector is bearing the index's weight and movement.
CPI April 10- This data will reveal whether the Energy sector weight is genuinely lowering average consumer costs. This will serve as a greenlight if cooling on the inflation (rise in prices) data.
WPI April 14- The Exporters question's key indicates whether production costs are finally declining.
ZEW Economic Sentiment April 21- To verify if the Middle East recovery is real, as oil prices may rise and further pressure margins, renewed tension may appear to pose a threat to the index.
TECHNICALS
From the day chart showing price stretching downward direction after the German data released few hours ago.
Resistance 1 (Ceiling price) at 24004
Resistance 2 at 24602
Support 1 (Floor price) at 23631
Support 2 at 23217
To note, we see downward or bearish momentum for the index, and 22762 could possibly break if the interest rate increase by the ECB (European Central Bank) is on the horizon and there is ongoing exhaustion from energy costs, which can affect the economic activity.
The 1-minute chart seen bearish or downward movement. The market (as expected) reacted towards the negative German economic indicator data. Industrial production dropped by 0.3% versus the forecast of a 0.7% increase.
The weekly chart seen bullish or upward movement. This signifies that the index is still showing signs of recovery since it is still on its first quarter even impacted by the geopolitical tension across the Middle East, wherein the index's main driver is energy sector based.
1 hour chart during the market opening in the USA floating at 23731 level tiptoeing downward movement.
Conclusion & The ACY Edge
If the Euro will remain uptrend movement, we expect manufactured German products to be more expensive along with if the inflation will be higher. The index is now at the proving ground stage. The overall trajectory toward stabilization is still intact, despite the fact that short-term data is still noisy and weak. Traders should look to the CPI release on April 10 as the next critical catalyst, a cooling inflation data could provide the fundamental green light needed for the weekly bullish trend to reclaim control over the short-term bearish momentum.
Disclaimer: This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.
