The DAX lost 207.7 points on Friday closing at 12212.6, as the Italian government released official budget targets calling for a 2019 deficit of 2.4% of gross domestic product, up sharply from this year's 0.8% and marking a significant rise in spending. The gap is seen potentially triggering downgrades of Italy’s credit rating, worsening the country’s debt outlook, and putting Rome and its populist coalition government on a collision course with Brussels over European Union fiscal rules. In economic news, German unemployment change plunged by 23k on Friday, beating the estimate of -9k. In the Eurozone, inflation indicators missed their estimates. Core CPI ticked lower to 0.9%, shy of the estimated 1.1%. Today, German Retail Sales data will be released at 06:00 GMT and German Manufacturing PMI at 07:55 GMT. Also, the Eurozone Manufacturing PMI and Unemployment Rate will be released at 08:00 GMT and 09:00 GMT respectively.
The DAX broke September's uptrend after reaching a new monthly high and is currently between our support and resistance levels of 12208.5 and 12279.9 respectively. The 20 period SMA has breached the 50 period SMA from above on the hourly chart, indicating a bearish change in market sentiment. Further downside is expected as long as price remains below the respective moving averages.
Support: 12208.5 12172.7 12126.9 12049.5
Resistance: 12279.9 12344.9 12407.4 12459.6