Two trades to watch: DAX, USD/JPY

Graphic of trading data chart
Fiona Cincotta
By : ,  Market Analyst

DAX rises with Russia, Ukraine headlines & German GDP in focus

After falling 4% yesterday, the DAX is looking to open higher today as investors continues assessing the latest Russia, Ukraine headlines and after the release of the German GDP.

Q4 German GDP was upwardly revised to -0.3%, contracting less than the -0.7% initially estimated. The Bundesbank have warned that they expect the German economy to contract again in the current quarter, owing to Omicron, before rebounding in Q2.

The latest round of sanctions announced on Russia, continue to focus on banking and the elite, leaving the energy sector unscathed for now. The EU are not agreeing to UK & US demands to remove Russia from the Swift system. The sanctions are not as harsh as feared prompting a reversal on Wall Street yesterday..

Eurozone consumer confidence is due later. However, sentiment is expected to be the biggest driver.

Learn more about the DAX

Where next for the DAX?

The DAX has recovered from yesterday’s low of 13800 bringing the RSI out of oversold territory. However, the RSI is still below 50 and the price remains firmly below its 50 & 100 sma suggesting that the picture remains bearish for the DAX..

Having reached a 14350 earlier in the session seller re-entered pulling the price towards support at 14100 level. A break below here could bring yesterday’s low of 13800 back into play.

Buyers would need a move over 14800 the February 23 high to negate the near term down trend and open the door to 15000 round number.

DAX chart

 

USD/JPY looks to US PCE inflation data

USD/JPY rose in the previous session as the USD was the safe haven of choice as Russian attacked Ukraine.

Today the pair is easing lower, as the broad market mood cautiously improves after sanctions weren’t as bad as feared.

US Core PCE the inflation gauge preferred by the Fed, is expected to rise to 5.1% YoY in January. This is the final PCE reading before the March FOMC, with the Fed caught between a 25 or 50 basis point rate hike.

High inflation could raise bets of a more aggressive Fed.

What to expect from PCE data

Where next for the USD/JPY?

USDJPY rebounded off the 100 sma yesterday before running into resistance in early trade today at 115.65, yesterday’s high. The pair trades above the 50 & 100 sma on the rising trend line depicting a bullish bias. However the pair remains trapped by resistance at 115.65.

A break above here is needed to look towards 116.00, 166.35 and fresh 2022 highs.

On the downside, the 50 sma at 114.95 in the near-term support with a break below here exposing the 100 sma at114.30. A move below this level could see sellers gain momentum.

usdjpy chart

 

 

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Related tags: USD Forex

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