European Indices traded lower on Thursday as the ECB opted not to cut rates when markets had been betting on the alternative. The DAX posted the sharpest loss as it declined by 1.28% as the ECB’s outlook on the Eurozone deteriorates however failed to find support on the increased likelihood of easier monetary policy throughout the year. Separately on economic data, German business sentiment figures fell below expectations and highlighted the economy’s bleak outlook. With no major economic releases out of the Eurozone today, the DAX is likely to be influenced by corporate earnings and direction on Wall Street as the US publishes Q2 GDP figure.
The DAX reversed the gains of its rally as it fell by 160 points to end at 12362. The price attempted to overcome resistance at 12600 before dropping to the support at 12300. We can look to the 20 and 50 period MA to provide an area of dynamic resistance on the DAX’s turnaround. Meanwhile, Failure to trade above the resistance at 12425 should limit the chances of price meeting the 20-period MA at 12470. A sustained move below the 12380 would be required to indicate selling pressure and lead the DAX back towards yesterday’s low at 12300. If price trades below this level, it may drive the DAX towards the support near the 50-day MA at 12230.
Resistance: 12425 /12470