Two trades to watch: DAX, USD/CAD

DAX rises despite falling consumer confidence. USD/CAD falls as oil climbs.

Charts (4)

DAX rises despite falling consumer confidence

The Dax is heading higher, building on gains from the previous session despite a weaker finish on Wall Street.

Wall Street closed in the red as rising oil prices stoked inflation fears again, and treasury yields rose.

While oil prices continue to rise, the market mood remains buoyant, with investors also shrugging off deteriorating consumer morale.

The GFK consumer confidence fell to -27.4 in July, down from -26 in June, marking a fresh record low as record-high inflation amid the fallout from the Russian war weighs on household sentiment.

Where next for the DAX?

 

The DAX trades below its multi-month falling trendline, 20 & 50 sma. The price fell to a low of 12835 last week and is attemptiNg to rebound. The receding bearish bias on the MACD is bringing optimism to buyers, who need to break above 13450, last week’s high, to test the falling trendline resistance at 13475 and expose the 20 sna at 13700.

Meanwhile, sellers could focus on the 20 sma crossing below the 50 sma in a bearish signal. Sellers would need to break below 12835 to create a lower low and target 12460 at the 2022 low.

DAX chart

USD/CAD falls as oil climbs

USDCAD is falling for a third straight day as the USD continues to weaken and as CAD tracks oil prices higher.

Oil rose yesterday after G7 leaders announced plans for further sanctions on Russian oil, tightening an already tight market. Meanwhile, Libya and Ecuador have warned of lower production due to political disruptions.

API crude oil stockpile data is due later.

Meanwhile, the USD is extending declines for a fourth straight session amid growing concerns about slowing economic growth and the reining in of aggressive Federal Reserve best. The Fed Funds rates are expected to be 3.4% by next year, down from over 4%.

Looking ahead, US consumer confidence is expected to show morale falling to 100.4, down from 106, as rising inflation takes its toll.

Where next for USD/CAD?

USDCAD rebounded lower off 1.3080 breaking below support at 1.29 which combined with the bearish crossover on the MACD is keeping seller’s hopeful of further downside.

Immediate support can be seen at 1.2810 the 50 sma which could open the door to 1.2770 the rising trendline support and 1.2730 the 100 sma

Meanwhile buyers will be looking for a move over 1.29 congestion zone on the way to 1.30 the June 23 high.

USDCAD


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