Two trades to watch: Dax, USD/CAD
Fiona Cincotta July 6, 2021 2:48 AM
Dax edges lower after weaker than expected factory orders, ZEW sentiment data in focus. USD/CAD weakens as oil prices surge after OPEC+ talks collapse.
Dax digests weak factory orders, ZEW sentiment up next
The Dax has rallied hard over the past two months. The run higher is starting to look a little tired. Yesterday the Dax led losses in Europe, despite stronger than expected PMI data.
Today, economic data is less encouraging as German factory orders unexpectedly fall -3.7% MoM in May, down from -0.2% in April but well short of the 5% rebound expected.
Attention will now turn to ZEW sentiment data which is expected to ease slightly in July to 75.4, down from 79.8 in June.
Where next for the Dax?
After reaching an all time high in mid June, the price has been consolidating, forming a symmetrical triangle, capped on the bottom side by a trendline dating back to the start of the year and on the upper side by the descending trendline from the all time high.
The price could continue to consolidate sessions before looking to break out of the triangle on either side.
The 50 sma also appears to be offering strong support in the middle of the symmetrical triangle pattern at 15600 a break below here could indicate further losses to come.
The MACD appears to be forming a bearish crossover, supporting further downside.
Sellers would be looking for a break below 15530 and then 15450 horizontal support to see the selloff gain traction.
Meanwhile, buyers will be looking for a breakout beyond 15700 to then go ahead to target 15800 and fresh all time highs.
USD/CAD declines as oil prices surge
USD/CAD trades under pressure, reversing Monday’s gains amid strong oil prices, Canada’s main export.
Oil prices surge as OPEC+ talks collapsed on Monday with no agreement to raise production. WTI rallied to $76.90 its highest level in two and a half years.
A softer tone surrounding the US Dollar is adding pressure to the pair. The US Dollar Index trades 0.1% tracing US treasury yields lower.
Looking ahead, US ISM non-manufacturing PMI data will be in focus, a strong print could see USD/CAD attempt a rebound.
Where next for USD/CAD?
USD/CAD is pushing lower, extending its move away from 100 day ma resistance. Failure to retake this resistance level yesterday combined with bearish cross over forming on the MACD is supportive of further downside.
A move below 1.23 round number could open the door to a test of 1.2250 the late June low, before the 50 dam comes into focus at 1.22.
Any meaningful recovery would be looking to move above the downward sloping 100 dma at 1.2375 in order to target 1.2450 the July high.
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.