GER30 feels the inflation effect
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The DAX has run into resistance and is finding it difficult to overcome the 14,500 level. In this regard, we refer to FXCM's GEr30 CFD. The trend-following EMAs have crossed down (black ellipse), and the stochastic is heading towards its lower quintile (blue arrow). If it reaches and holds and the EMAs develop angle and separation, bearish will push the index down.
The resistance stems from the rapid increase in Eurozone inflation and the adjustment of the German bund. The longer-term correlation between bund yields, currently at 1.11% and the GER30 is -0.42. i.e. as interest rates adjust to the inflationary pressures, the stock market feels the pinch.
Russell Shor
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.
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