EUR/USD, DAX Forecast: Two trades to watch

EUR/USD inches higher ahead of US GDP, ECB minutes

• EUR is limited by French political concerns
• ECB minutes, EZ consumer confidence & US GDP, jobless claims data due
• EUR/USD trades below 50 SMA

The EUR/USD trades modestly higher amid modest USD weakness, lingering tensions between Trump and Fed, and as investors look ahead to a busy economic calendar.

The EUR is inching northwards, but gains are limited as French political concerns continue to limit the upside.

French Prime Minister François Bayrou is at risk of being ousted after calling for a vote of no confidence next month over his minority government's plans to cut the budget deficit. The EUR/USD dropped to a three-week low yesterday as the spread between the front in government bond yields widened.

Today, attention is turning to the eurozone economic calendar, with consumer confidence data expected, as well as the release of the ECB meeting minutes. The central bank left rates unchanged in September, after seven consecutive rate cuts, as inflation cooled to the 2% target. The market will scrutinize the minutes for clues over whether the ECB will cut rates once more before the end of the year.

Concerns surrounding the Federal Reserve's independence persist after President Trump dismissed Fed Governor Lisa Cook. Trump's intentions are clear here as he looks to replace the Fed board with more dovish members in order to fulfill his desire for lower interest rates.

The market is pricing in an 87% probability that the Fed will cut rates by 25 basis points in the September meeting. Ahead of that meeting, there are still plenty of data points to watch, including US core PCE inflation figures tomorrow CPI data, and a non-farm payroll report in the coming weeks.

Attention will be on US GDP data, which is expected to confirm annual growth of 3.1% in Q3. Weaker-than-forecast data could increase Fed rate cut expectations and pull the US dollar lower.

Attention will also be on initial jobless claims, which are expected to ease slightly to 230 K, and pending home sales.

EUR/USD forecast - technical analysis

EUR/USD trades above its multi-month rising trendline, indicating a longer-term uptrend. However, the price faced rejection at 1.17, rebounding lower from the short-term falling trendline and breaking below the 50 SMA.

Sellers will look to retest the 1.1575 support,  this week’s low, and the April high. Below here 1.15, the rising trendline comes into view ahead of 1.14, the August low.

DAX rises as Nvidia calms AI worries, ECB minutes are up next

• Nvidia beats forecasts but falls after data centre revenue disappointed some
• ECB minutes will be watched for clues on ECB rate cut path
• DAX holds above 24k, consolidating below its record high

The dark says pushing higher on Thursday as investors weigh up Nvidia's results and look ahead to the release of the ECB minutes later today.

Nvidia's results came in ahead of expectations, beating on both the top and bottom line, while Q3 revenue guidance was also stronger than expected. However, disappointing data centre revenue and questions over China sent the AI bellwether’s share price lower in after-hours trading. Given Nvidia's lofty valuation, anything less than perfect was likely to be punished.

That said, the umbers have quelled concerns from earlier in the month, which saw the AI trade wobble after MIT reported that 95% of AI projects are failing to produce profitable returns.

Semiconductor stocks in Europe were mixed, with ASML edging lower whilst Infineon Technologies is booking gains.

Separately, Delivery Hero is rising 3% after the German online takeaway food company reported slightly better-than-expected revenue growth in Q2.

On the data front, consumer confidence data is due shortly, and the minutes from the ECB policy meeting will also be closely watched for clues on when the ECB may cut interest rates again. The central bank left rates unchanged in September but is expected to cut rates again this cycle.

DAX forecast – technical analysis

The DAX trades within a familiar range, caught between 24,600 and 24,000, as it consolidates below the record high. The price trade is testing its multi-month rising trendline and 50 SMA support; however, momentum is slowing, with the RSI is 50.

Should the 24,000 support hold, buyers will look to rise towards 24,600 and fresh record highs.

Sellers will need to break below 24,000 to extend losses towards 23,380, the August low. A break below here brings 23,000 into focus.