Risk appetite rises sending stocks higher
DAX => The index rises above 14500
BTC/USD => The cryptocurrency rises above 30k
EUR/JPY => The pair rises above 136.50
DAX rises ahead of German inflation data
The DAX rallied 3.4% across last week, boosted by rising risk appetite as bets of a more aggressive Federal Reserve cooled, although inflation and recession risks remain.
Today the index is heading higher as the new week kicks off, helped by a strong close on Wall Street on Friday after the Fed’s preferred gauge for inflation showed that prices cooled and after strength in the Asian session, where stocks hit a three-week high.
Attention now turns to German inflation data, which is expected to show consumer prices rising to a fresh record high in May. Trading could be quieter in the latter half of the European session, given the public holiday in the US.
|US Core PCE
Ger. CPI YoY May
|Actual: 4.9% (0.3%)
Expected: 7.6% (0.2%)
Where next for DAX?
The DAX has extended its recovery from 13280, the May 10 low, retaking the falling trendline resistance and the 50 sma, and is currently testing resistance at the 100 sma.
A move above here combined with the bullish MACD keeps buyers optimistic about further gains. Buyers will need to break above support at 14600, the April high, in order to continue the bullish trend towards 14930, the March high, and 15000 round number.
On the flip side, support can be seen at14265 the May 18 high, ahead of 14100, the 50 sma, and 13900, the falling trendline support, negating the near-term uptrend.
Bitcoin rises after last week’s decoupling from stocks
BTCUSD fell a further 1.3% last week, marking the 8th straight week of declines.
The cryptocurrency fell to a low of 28k as it decoupled from US equities, which posted substantial gains across the week. Volume appears to have been a key factor in bitcoin’s decline as trade volumes have fallen considerably. Over the weekend, BTCUSD managed to push higher and is extending those gains today, although the bigger picture shows that the crypto remains in a consolidation phase. 28k is the lower level that must be broken to 25600 ahead of 20k.
Buyers will be encouraged by a move over the 20 sma at 29.5k, which, if sustained, would be significant given that the price has traded below this resistance since early April.
EUR/JPY rises ahead of EZ consumer confidence
EUR/JPY rallied 1% across the previous week after the ECB upped its hawkish rhetoric with President Christine Lagarde pointing to several interest rate hikes across the summer, and she even hinted towards a 50 basis point interest rate hike should the data point in that direction, to tame record-high inflation.
The growing BoJ – ECB divergence boosted the pair. Today German inflation data will be under the spotlight as well as European consumer confidence is expected to remain steady. However, economic sentiment in the region is expected to edge lower. Looking ahead, Japanese industrial production data is due and is expected to show a marked decline in output.
|EZ consumer confidence
Jap. industrial output YoY Apr.
|Expected: -21.1% (0%)
Expected: -2.5% (0.8%)
Support can be found at 135.86 (50 sma) and 134.00 (May 19 low).
Resistance for the pair can be seen at 136.75 (late May high) and 138.30 (May high).