Euro Rallies Largely on the Back of Dollar Weakness

Euro Rallies Largely on the Back of Dollar Weakness

Against the US dollar, the euro regains ground. EUR/USD is exchanging at 1.2255 in the American session, up 0.34 percent on the day. The euro has hit a new daily high of 1.2262, the highest since Jan. 4. The euro gained a foothold despite the vacation on Monday, and the rising trend has continued on Tuesday. The German Ifo Business Confidence Index for May surpassed, which impressed investors.

The euro has risen sharply today, while the German DAX and Stoxx 600 have set new peaks. Positive sentiments were boosted by a positive German business climate reading. For the time being, only the New Zealand Dollar and Swiss Franc outshine the common currency. Strong investor confidence, on the other hand, makes the Yen the worst currency, followed by the Dollar and then Sterling.

The Federal Reserve has maintained its stance that its ultra-accommodative approach will continue and that current QE levels will be maintained. Inflation rose sharply in April, prompting speculation that the Fed would consider reducing its quantitative easing program. This boosted the US dollar briefly in May, but the market appears to have embraced the Fed’s line that higher inflation is only temporary and that policy tightening is still a long way off. The US dollar has been under pressure as a result, with the euro and other major currencies continuing to rise.

Euro performance undeterred by Germany’s low GDP

Germany is a country that has an Ifo market climate increased to 99.2 in May, up from 96.8, exceeding the 98.1 forecasts. This is the highest amount since May of this year. The current assessment index increased to 95.7 from 94.1, exceeding the 95.5 forecasts. The expectations index increased to 102.9, up from 99.5, which was higher than the forecast of 101.0.

Manufacturing increased from 25.1 to 25.7, services increased from 3.5 to 13.7, trade increased from -0.5 to 8.4, and construction increased from 0.7 to 2.8. The strong euro has been unaffected by Germany’s poor GDP report for the first quarter.

Germany’s economy shrank by 3.2 percent year on year and 1.8 percent year on year (MoM). The revival of Covid-19 in the first quarter of Q1 hindered economic growth, and the German economy is technically in recession, with fourth-quarter GDP still in negative territory.

Amid the gloomy GDP survey, the outlook appears to be upbeat, as the vaccine rollout has culminated in a severe decline in Covid cases in the last week, and some German states are loosening health constraints.

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German Dax hits April 16 highs

German Dax hits April 16 highs

Key Resistance: 15535
Key Support: 15355 – 15250

The German Dax has rallied 5% since it bottomed around 14820 late last week and now is retesting April 16 highs (all time highs) whilst breaking the short term structure and last week´s highs.

The last time the Dax traded at these levels it dropped 4.56% (710 pips) to the 14900 level.

In the short term, bullish targets have been hit at the 1.618 of the last leg down and printing a 1H bearish candle that engulfed the past 6 1H candles.

Historically, we have seen multiple drops at previous all time highs ranging from 4% to 15%.

We will pay close attention and manage this trade quickly should buying volume is detected.

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Author : Orlando Gutierrez

DAX 30 Shows Exhaustion Signs!

DAX 30 Shows Exhaustion Signs!

DAX 30 stock index drops at the time of writing after reaching a monthly resistance. Actually, a temporary decline could be natural. A retreat could help us to catch a new upside momentum.

As you already know, the German index registered a new all-time high of 15,521.6, so it’s risky to buy around this top. A corrective phase could bring new opportunities soon.

DAX 30 is traded at 15,112 level and it could slip lower after failing to stabilize above the R1 (15,447). The immediate uptrend line is seen as an important near-term target. Also, the index could approach the weekly pivot point (14,641) after registering the false breakout above the R1.

The outlook is bullish despite the current decline. Only a major reversal pattern and a drop below strong support levels will signal that DAX 30 could develop a larger drop.

You can join our VIP group HERE if you want to receive new buying or selling signals on DAX30.

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Author : Olimpiu Tuns

Olimpiu Tuns

Olimpiu Tuns graduated with a Master in Business Administration and is a seasoned Market Analyst / Trader / Trainer with 10 years of experience in the financial markets having expertise in Forex, Commodities, Index, Cryptocurrencies, and Stocks. He worked as a Market Analyst for three major brokerage companies, as a prop trader, and as a contributor/content creator for news portals and educational platforms.

DAX Performs Positively as Market Risk Mood Soars

DAX Performs Positively as Market Risk Mood Soars

Germany stocks traded higher on Thursday, as Transportation and Logistics, Industrials, and Media sectors saw significant gains. At the close of the market yesterday (Frankfurt time), the DE30EUR (DAX) grew by about 0.4%, while the MDAX and TecDAX rallied by 0.87% and 0.08%, respectively.

The best performers under the DAX were Volkswagen (DE: VOW3), which spiked by 4.5%. The Deutsche Bank AG (DE: DBK) grew by 4.1%, while the MTU Aero Engine (DE: MTX) rose by 3.16%.

Meanwhile, the worst performers of the session were Infineon Technologies AG (DE: IFX), which dropped by 1.5%. The SAP SE (DE: SAPG) fell by 1.22%, while the Deutsche Boerse AG (DE: DB1G) ended the day with -1.1%.

Altogether, rising stocks outnumbered plummeting ones on the Frankfurt Stock Exchange by 438 to 241, while 31 remained unchanged.

Meanwhile, the DAX volatility index (V1XI)—which monitors the implied volatility of DAX options—dropped by 8% to 21.37, a six-month low.

In other news, President-elect Joe Biden has hinted at a whopping $1.9 trillion to bolster the US economy, one of the worst-hit of the COVID-19 pandemic. This announcement was the crucial supporting factor for risk assets and indexes, like the DAX, over the week.

Paul Donovan, Chief Economist at USD Global Wealth Management, explained in a podcast that “realistically, it will be a stimulus that hits the second quarter, rather than the first, as Congress is not going to pass this at once, and almost certainly will not pass the proposals as they stand.”

Donavan noted that the Democratic support for additional state and local government aid and minimum wage increase are both likely to trigger strong opposition from Republican Senators.

The 50-50 split in the upper chamber could expose some parts of the package to filibusters unless bipartisan support for the bill can be attained. However, a bipartisan agreement at the moment seems very unlikely considering the recent political tensions that swept through the country.

Meanwhile, recent expectations that the vaccine rollout will essentially end the pandemic by the middle of the year has been thrown into uncertainty. New mutations of the virus, crawling distribution of vaccines, and scattered evidence of issues about the effectiveness of the vaccines are all adding to the growing concerns plaguing the market.

In Germany, Covid-related deaths have hit a record high, as the country reported 1500 deaths just 24 hours ago. Across Europe, especially in the UK, public healthcare facilities have reached their maximum capacities and are under pressure to admit more.

That said, Germany might go with the UK in extending lockdown restrictions through the end of the first quarter at least. Google mobility data show that activities across the continent have dropped significantly at the start of the new year.

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Author : Azeez Mustapha

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.