EUR/USD, DAX Analysis: European Open – 30th May 2023

Asian Indices:

• Australia's ASX 200 index fell by -8.8 points (-0.12%) and currently trades at 7,208.60
• Japan's Nikkei 225 index has risen by 317.23 points (1.03%) and currently trades at 31,233.54
• Hong Kong's Hang Seng index has fallen by -152.9 points (-0.82%) and currently trades at 18,398.21
• China's A50 Index has fallen by -135.75 points (-1.08%) and currently trades at 12,453.87

UK and Europe:

• UK's FTSE 100 futures are currently down -5 points (-0.07%), the cash market is currently estimated to open at 7,622.20
• Euro STOXX 50 futures are currently up 6 points (0.14%), the cash market is currently estimated to open at 4,326.01
• Germany's DAX futures are currently up 15 points (0.09%), the cash market is currently estimated to open at 15,967.73

US Futures:

• DJI futures are currently up 39 points (0.12%)
• S&P 500 futures are currently up 10 points (0.24%)
• Nasdaq 100 futures are currently up 56.75 points (0.4%)FOMC minutes

Trading volumes should pick up today now that UK and US traders return to their desks. And whilst there’s no top-tier economic data to kick the week off, there is certainly a steady stream of data points to get things moving along, so to speak.

GDP data for Sweden and Switzerland are at 07:00 and 08:00 BST respectively, with the KOF indicator and Spanish CPI also at 08:00. M2 money supply data for the Eurozone is at 09:00, followed by consumer and business sentiment.

Of particular interest are the consumer inflation and selling price expectation figures, because if they come in low enough if further reduces the need for the ECB to tighten and could weigh on euro. Particularly if they treat us al to negative, deflationary prints. And that may not be so far fetched given they peaked in March and May 2022 respectively and have both trended lower since.   

DAX 1-hour chart:

The DAX pulled back towards the lows of its range last week, yet managed to hold above them and instead print a double bottom just above the March high to show demand around this level. A strong rally followed, and we noted strong buying volumes around the midpoint of the rally and 50% retracement level to indicate a potential level of support just above 15,900. The RSI (2) reached overbought and is now back above 50 to suggest a swing low may be close, if not already arrived. The bias is bullish today above 15,900 and for a move back above 16,000 to the 16,070 high or within the gap resistance zone. A break below 15,900 risks a deeper pullback towards 15,800 or the double bottom just above 15700.

EUR/USD 1-hour chart

A descending triangle is forming on the 1-hhour EUR/USD chart, which projects an approximate target around 1.0600 I successful. However, prices are holding above 1.0700, a level which has so far held for a second time to show demand around that level. Perhaps we’ll see prices recycle higher until a breakout occurs, but if euro data comes in weak enough then the bias is for a downside break. 1.0668 might provide an initial target as it is the March VPOC (volume point of control), and we also have a HVN (high-volume node) just above 1.0600 should prices continue lower.

But the longer 1.0700 holds, the greater the odds of a countertrend bounce. A break above the 1.0726 high assumes a move up towards the 1.0760 area.

Economic events up next (Times in GMT+1)

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge