DAX index outperformed major European Indices for a second day as the US and China are reportedly closer to settling a deal. The index surged beyond Wall Street gains as prospects for world trade developments bear greater influence and impact on the German economy. In addition to that, risk appetite was upheld as a long-term German bond yield exited negative territory for the first time since it declined below zero over a week ago and services PMI data out of Germany and Eurozone showed improvement. Later today, the presidents of the two largest economies are scheduled to meet and markets will continue to monitor Sino-US trade progress to maintain gains on the DAX while expectations on an economic slowdown in the Eurozone should be underlined by the ECB’s account on their monetary policy meeting.
The DAX index surged 1.7% higher to end at 11954 on Wednesday. Price reached resistance at 11970 and has yet to trade above this level to extend towards the 12000 level. On the daily chart, trend line resistance shows the 12000 level acting as a barrier for further advances on the DAX. Unless this level is broken, the index should drift lower alongside a break of the support trend line on the RSI and an exit of the overbought region, with the initial support at 11850.