Monday, September 2, 2019



Fundamental Highlights

The DAX posted the sharpest gain among European majors as it traded 0.85% on Friday amidst positive trade news. Last week, though China expressed a willingness to negotiate and prevent an escalation in the trade war, the latest round of US-China tariffs went into effect on Sunday. This development may inspire risk averse flows for the day. Separately on economic data, the Eurozone unemployment rate remained steady at 7.5% while the CPI figure was in line with estimates at 1%. The inflation figure remains well below the ECB target of 2% thereby supporting the case for ECB economic stimulus. Today, Germany and the Eurozone publish manufacturing PMI figures which are likely to influence direction on the day. Moreover, expect the release of China’s improved manufacturing PMI figure to provide support. Apart from the data, markets should monitor trade and geopolitical headlines as they hold a stronger influence over price action and sentiment.

Technical Analysis

The DAX posted a sharp gain on Friday as it added 100 points to end at 11939. The price broke through the critical resistance level at 11860 and neared towards the resistance at 12000. Today, look for price to hold above 11920 to maintain buying pressure with a trade through 12000 required to target the 50-day MA at 12080. Alternately, a sustained move below 11920 would indicate selling pressure and lead the DAX to the now support at 11860 followed by the 11800 level near the 20-period MA.

Support: 11860/11800
Resistance: 12000 /12080

Chart (H4)