Two trades to watch: DAX, USD/JPY

Germany flag
Fiona Cincotta
By :  ,  Market Analyst

DAX rises post GDP data, IFO business climate up next

 

The DAX managed to book a modest gain of 0.2% yesterday, snapping a three-day losing run. News of Russia unexpectedly halting gas supply along the Nord Stream 1 pipeline for three days and weak PMI data hit demand for the Germany index. More broadly, fears of a hawkish Fed at the Jackson Hole Symposium weighed on risk sentiment.

Today the pair is rising, albeit cautiously, after German Q2 GDP data was upwardly revised to 0.1% from 0% QoQ. On an annual basis, GDP rose 1.7%, upwardly revised from 1.4%.

Attention now turns to the German IFO business climate survey, which is expected to fall to 86.8 in August, down from 88.6 in July. This would market the lowest level since the depths of the pandemic.

The deteriorating outlook comes as the energy crisis in the country deepens, as the drought impacts trade down the Rhine, and as inflation could be set to rise over 10% in the coming months.

Learn more about trading the DAX

Where next for the DAX?

 

After falling away from 14000, the DAX found support at 13100 and has been attempting to rise higher. The price has risen above the 50 sma, which, combined with the receding bearish bias on the MACD, keeps buyers optimistic about more upside.

Still, buyers have a long march higher to 14000, which they need to retake to create a higher high. Before there, resistance can be seen at 13665 the 100 sma. The price has traded predominantly below the 100 sma since February.

dax chart

 

USD/JPY slips on USD weakness as Jackson Hole begins

 

USD/JPY is falling, paring modest gains from the previous session as investors reposition ahead of the Jackson Hole Symposium.

Earlier in the week pair rose to 137.10, a monthly high as investors priced in a more hawkish Federal Reserve after several Fed officials notched up their hawkish rhetoric.

Today’s fall lacks any fundamental backing and so could remain limited, particularly in light of dovish comments from the BoJ overnight.

Looking ahead, US Q2 GDP is due to be upwardly revised to -0.7% annualised, up from -0.9%, keeping the US in a technical recession. Although the recession isn’t showing itself in

Meanwhile, jobless claims are expected to rise to 253k, up marginally from 250k in the previous week.

Clips are expected from the Jackson Hole Economic gathering, although Fed Powell’s speech tomorrow is expected to be the highlight.

What to expect from the Jackson Hole Symposium

Where next for USD/JPY?

 

Having risen from 130.40 at the start of the month, USD/JPY is consolidating, supported on the downside by the 50 sma at 135.70 and capped the upside around 137.70.

A break-out trade would see buyers looking for a move over 137.70 to open the door to 139.40 and extend the bullish run.

Sellers will look for a move below 135.70, bringing 134, the late June low, into play before exposing the 100 sma at 132.50.

 

usdjpy chart

 

 

 

Related tags: Trade Ideas Dax USD/JPY Forex

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