GER30 Down as Markets are Edgy, Tests Key Technical Levels
GER30 Analysis
Inventors appear cautious at the start of the European session, following a mixed lead from their Asia-Pacific counterpart, as they digest news around the Covid-19 situation in China, the world's second largest economy and one of Germany's top trade partners.
The Chinese mainland reported 1,251 new locally transmitted COVID-19 cases for April 11 and there were also 23,387 new asymptomatic carriers (local and imported), down from 26,411 in the previous day. [1]
Reuters reported that Shanghai eased some lockdown measures, classifying certain areas as lower-risk [2]. The US State Department issued a travel advisory on Monday, for its citizen's to reconsider travel to China due to "arbitrary enforcement of local laws and COVID-19-related restrictions" and also ordered the departure of non-emergency government employees and all family members from Shanghai. [3]
Data released earlier today, showed that Germany's Headline Inflation rose to +7.3% in March year-over-year, from 5.1% in February year-over-year, the highest levels since the country's reunification. Last week, Preliminary CPI for March in Eurozone had climbed to 7.5% year-over-year, while the final reading for February was 5.9%.
These figures definitely put pressure on the European Central Bank, ahead Thursday's monetary policy meeting. In March, the ECB had announced a faster tapering of its asset purchases and a faster conclusion of the program in Q3, but it also has to worry about potential economic slowdown from the war in Ukraine and the sanction against Russia.
Market participant now brace for the Consumer Price Index from the US (12:30 GMT), while Germany and Eurozone ZEW Economic Sentiment is due at 09:00 GMT.
GER30 had not avoided a negative week, although it had managed to stay above the key 38.2% Fibonacci of the March Low/High advance. The current one starts in a negative manner and the index sets monthly lows today, breaching the aforementioned level (13,992). This exposes it to 13,394-13,269, although bears may need fresh impetus for larger decline that would put the year's lows (12,425) in the crosshair.
On the other hand, the Relative Strength Index (RSI) points to oversold levels and that could offer some respite and give GER30 a chance to rebound towards the EMA200 (at around 14,400). However a strong catalyst would be needed for moves higher that would pause downwards momentum and the upside contains significant roadblocks.
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.
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