GER30 Not Helped By Economic Data

  • GER30

GER30 - H1

Three political parties - Social Democrats, Greens and Liberals – announced on Wednesday that they have agreed to form a coalition government, following the results of September's general elections.

This deal needs to be considered by party members, but the aim is for Olaf Scholz to become Germany's new Chancellor before mid-December, ending Ms Merckel 16-year leadership.

Governments in Germany tend to be stable, but coalition talks can drag for a long time and yesterday's relatively swift agreement was important, especially in the face of the worsening pandemic situation, that had weighed on the GER30 recently.

Thursday on the other hand, begins with discouraging economic releases from Europe's largest economy, as final Q3 GDP was 1.7% q/q vs 1.8% preliminary reading, while December GfK consumer confidence dropped to -1.6, compared to 0.9 prior.

The index had posted its 5th straight negative day yesterday and threatened the 23.6% Fibonacci of the "October lows/November record highs" rise (15,732-26) as we had expected form yesterday's analysis, but news around the coalition government helped it push back.

It was unable though to avert a daily close below the aforementioned level and remains below its EMA100, thus near-term downward bias is still intact. As such, fresh pressures towards 15,732-26 are likely and a break below it can open the door towards 15,493, but we are still a bit cautious about that.

Overall sentiment seems improved today and GER30 tries to stay is profitable territory, despite uninspiring economic data, having the opportunity to push for the EMA100 (16,020-30). A break above, will pause the current bias to the downside and will allow it to extend the recovery towards 16,179, although a catalyst will likely be required for such moves.

Past Performance: Past Performance is not an indicator of future results.

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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