GER30 Sets New June Lows & Risks Posting its Worst Month of 2022

  • GER30
    (${instrument.percentChange}%)

GER30 Analysis

Despite upbeat manufacturing activity from China and the lowering of the isolation period for international travelers entering the country [1], sentiment is downbeat as stagflation fears persist.

Germany's retail sales slumped 3.6%% year-over-year in May from -0.4% prior, although the monthly comparison is encouraging.

Last week, Germany had triggered the Alert Level of its emergency gas plan due to lower supplies, while a few days back the G7 countries strengthened sanctions against Russia and agreed to explore a price cap on oil imports. [2]

USOil rises this week, exacerbating inflation pressures, as the European Central Bank gears up for interest rates lift-off in July, factors which create a difficult environment for GER30.

Today it slumps to fresh June lows and sheds around 12% on the month, at the time of writing, which is on track to become the worst of the year. Caution is needed as markets appear jittery ahead of inflation updates from the US today and Eurozone on Friday.

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The technical outlook has not changed much from our previous analysis, since this week's decline brings bears closer to the 2022 lows from March (12,425), but fresh catalyst will likely be required for a bigger drop towards and beyond 12,139-12,069.

Despite today's poor performance, the move looks overextended as the Relative Strength Index (RSI) is deeply in oversold territory, which can provide support. As such, we can see reactions to 13,000-13,080, but a significant improvement in sentiment is needed for this and for a broader recovery that would challenge 13,428.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 30 Jun 2022 https://www.g7germany.de/resource/blob/974430/2057828/77d5804dd1ab3047bf0f5f74c1139066/2022-06-28-abschlusserklaerung-eng-web-data.pdf

2

Retrieved 08 Aug 2022 https://english.www.gov.cn/statecouncil/ministries/202206/28/content_WS62bac848c6d02e533532cdfd.html

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