DAX, Oil Forecast: Two trades to watch

DAX falls in cautious trade ahead of ECB lending survey

Will lending conditions have tightened further?

ECB rate decision on Thursday

DAX tests 200 SMA

The DAX is falling after strong gains yesterday, in cautious trade ahead of crucial US inflation data tomorrow and the ECB meeting on Thursday.

Expectations are for US inflation to edge up slightly for a second straight month, which could mean that the Federal Reserve is less inclined to cut interest rates. Following the stronger-than-forecast US non-farm payrolls, the market has already pushed back June rate cut expectations to below 50%.

Meanwhile, the ECB is expected to leave interest rates unchanged at their current record highs and could signal a potential rate cut in June. Although ECB Christine Lagarde is likely to

Today, ahead of the meeting on Thursday, we have the ECB lending survey. This survey provides information on bank lending and credit conditions in the region and is an important input for the growth outlook.

In the last survey, banks reported a net tightening of credit standards but to a lesser extent than in previous quarters. The survey can also provide some clues on household lending and the strength of private consumption.

The data comes after solid numbers from the region yesterday after the German manufacturing production rate went up to a 13-month high, its second straight monthly gain. Eurozone investor sentiment rose to a two-year peak, marking a sixth monthly improvement. The strong numbers helped the tax rise over 1% on Monday.

DAX forecast – technical analysis

After running into resistance yesterday at 18325, the DAX is testing support of the 20 SMA at 18200. A break below here could see sellers test the April low of 18085 and the rising trendline support at 18000.

Should sellers gain traction, 17660, the March low could come into focus. However, it would take a move below 17000 to negate the longer-term uptrend.

Meanwhile, buyers will look to rise above 18325, yesterday’s high to rise towards 18640 the ATH.

Oil rises as ceasefire hopes diminish.

Israel-Hamas ceasefire talks fail.

API oil inventory data is due later

Oil looks towards 87.75

Oil prices are heading higher on Tuesday amid diminishing hopes of a ceasefire between Israel and Hamas, fueling concerns that the ongoing conflict could disrupt oil supply in the Middle East region.

Ceasefire talks between Israel and Hamas held in Cairo on Monday pulled oil prices lower after a multi-session rally. However, comments from Israeli Prime Minister Benjamin Netanyahu dampened optimism that a ceasefire could be on the cards.

Both sides have been clear that the proposals have not met the demands required for a ceasefire. Without an end to the conflict, there is an elevated risk that other countries, particularly Iran, OPEC's third-largest producer, could be drawn into the war. As a result, the risk premium on oil increased, supporting the uptrend.

Meanwhile, on the demand side, data showed that India’s demand was at a record high in the 2024 fiscal year, and last week's data showed a surprise return to growth in Chinese manufacturing activity, also supporting the demand outlook.

Looking ahead, API oil inventories are due later after a large draw last week lifted oil prices.

US inflation data on Wednesday could also influence oil markets. Sticky inflation supports the Fed, keeping rates higher for longer, which could hurt the demand outlook.

Oil forecast – technical analysis

Oil continues to hold the break out above the multi-month rising channel in a period of consolidation, which is bringing the RSI back out of overbought territory. The long lower wick on yesterday’s candle suggests that there was little selling demand at the lower levels.

Buyers will look for a rise above 87.75, the April high, to extend gains to 90.00.

Support can be seen at yesterday’s low of 84.70, which was also the August high. Below here, the March high of 83.10 comes into play.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.