Two trades to watch: DAX, EUR/USD

Dax in focus ahead of German IFO data. EUR/USD steadies, German elections this weekend.

Germany

Dax in focus ahead of German IFO data 

The Dax is pointing to a mildly softer start, whilst European peers are set to open mixed as the bounce from the Fed fades and investors remain on edge over the fate of China’s debt ridden Evergrande. 

German IFO economic sentiment data is due later today. Both the business climate and expectations components are expected to tick higher. The current assessment is expected to tick to from 101.4 to 100.8. 

Looking ahead Germany heads to the polls this weekend for the first national elections without Angela Merkel in 16 years. 

Angela Merkel has been a key figure of stability, attracting business and investment.  

Learn more about the Dax

Where next for the Dax? 

The Dax rebounded from a low of 15000 and rallied for 3straight session taking the price back above the 100sma and briefly above the 50sma on the daily chart. Whilst the RSI is neutral, the shooting star candle points to a bearish reversal.  

Immediate support can be seen at the 100 sma 15610. A break below this level could see the index head towards 15450 the low September 9 before bringing 15285 in play the June low. 

On the upside, a close above the 50 sma is needed to convince the buyers of further upside and aim towards 15800 last week’s high. 

 

EUR/USD steadies, German elections this weekend

The Euro shrugged off yesterday’s weaker than expected PMI data, as supply bottle neck hit production. Meanwhile the US Dollar came under pressure after the Fed pushed back on tapering bonds until later in the year. 

Today the greenback is bouncing back amid a cautious mood in the market. Fed Powell is due to speak later and German IFO data is eyed. 

Learn more about the Euro 

Where next for EUR/USD? 

EUR/USD trades in a downward trend since the start of the month. Whilst oversold conditions helped the pair rebound off a monthly low, momentum has slowed. The RSI on the 4 hour chart is neutral.  

To extend the move higher EUR/USD need to break above the 50 sma on the 4 hour chart at 1.1750 this could see the buyers gain traction. Beyond here 1.1770 the upper band of the descending channel comes into play ahead of the 100 sma at 1.1800. 

On the downside, support can be seen at 1.1700 the round number and September 20 low. A break below €1.1682 could see the sellers gain traction. 


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