RISE INC. The technical trend is bullish above yesterday’s low of 9563, however, I would rather work with the 9400 level as the trend defining one to give the DAX 30 some leeway. If the 9400 holds as support, the DAX 30 may reach the January 14 high of 9945, and then (in the case of an extension), could continue further to the January 13 high of 10,165. Traders will probably use a pull back to the 9540-9676 range as an opportunity to add to their bullish exposure.
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FOMC on Tap
U.S. New Homes sales are on tap today and expected to rise by 2% MoM from 4.3% in November. However, this figure is not today’s main concern, the FOMC keeping most preoccupied.
The markets are betting on a dovish Fed as Retail Sales, the Manufacturing sector, Stock Markets, and Emerging Markets have been soft. This has pushed back expectations of Fed rate hikes to a mere 25bps over the next 12 months. The U.S. 2-year swap rate declined from 1.17% to the current 0.90% since the New Year. It’s fair to assume bullish investors would like to see a dovish Fed today as it allows firms to keep their financing costs and the USD low. If this indeed plays out in favour of the markets, the DAX may gain. If the FED happens to be more hawkish than expected it may actually soften the DAX.
I am personally expecting the Fed to be hawkish as the NFPs have been very strong and central banks move much slower and tend to be more long-term in their projections than investors.
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DAX 30 | FXCM: GER30
Created with Marketscope/Trading Station II; prepared by Alejandro Zambrano
--- Written by Alejandro Zambrano, Market Analyst for DailyFX.com
Contact and follow Alejandro on Twitter: @AlexFX00
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