DAX 40, AUD/USD resume their descents as copper price rally stalls 

Macro update

US weighs escalation against Iran: Axios reported that Washington was actively preparing to step up military action against Iran, although no decision had been made and the timing remained unclear. Israeli sources said any strikes would be large-scale and involve an Israeli component.

Wall Street pulls back from record highs: The S&P 500 and Nasdaq both fell 0.22%, while the Dow dropped 0.66% as long-dated Treasury yields resumed their rise. The declines ended four-session winning streaks for the S&P 500 and Dow, while Asian stocks also weakened, with the Nikkei down 1.1% and South Korea’s Kospi falling 2.1%.

AI funding plans add to bond market strain: Reports that SpaceX, Broadcom and Oracle were looking to raise tens of billions of dollars to finance AI chip purchases intensified pressure on sovereign debt markets. Credit default insurance on SpaceX reached record highs, while the 10-year Treasury yield held at 5.30%, close to a 24-year peak.

Oil prices surge as supply risks mount: Brent crude climbed more than 2% above $102 a barrel as attacks on Gulf shipping reached their highest frequency since the Iran war began, while a hurricane forced US producers to shut in around a quarter of Gulf of Mexico oil output.

Dollar holds near 18-month high as euro weakens: The dollar index stood around 102.25 after Fed minutes showed policymakers viewed inflation as the main risk, while markets still priced an around 80% chance of no rate change this month. The euro remained near a 17-month low around $1.12 as concerns over France’s finances spread to Italian and Greek debt.

Gold rebounds from two-month low: Spot gold recovered to around $4,141 an ounce as the dollar’s rally stalled, although elevated Treasury yields and the prospect of another Federal Reserve rate hike continued to weigh on the non-yielding metal.

DAX 40 back under pressure

The DAX 40's three day advance has given way to another down leg with the 200-day simple moving average (SMA) at 24,851 and the 1 October low at 24,832 representing possible downside targets. If fallen through, the July lows at 24,697-to-24,651 may be reached next.

Because of inverse polarity previous support at 25,176-to-25,164 is now expected to act as at least minor resistance ahead of the 18 September 25,286 and the 10 September low at 25,361 and, more importantly, Tuesday's 25,522 high.

Short-term outlook: bearish while below the 6 October high at 25,354

Medium-term outlook: bearish while below the 17 September high at 25,800, targeting the late June low at 24,548

DAX 40  daily candlestick chart

AUD/USD resumes its descent

AUD/USD formed an interim top at this week's $0.6990 high before resuming its descent towards the early October low at $0.7004 and the July low at $0.6923. If slid through, the March low at $0.6834 may be reached as well.

Minor resistance above the 17-to-23 July lows at $0.6963-to-$0.6966 comes in along the steep September-to-October downtrend line at $0.6983 and at Tuesday's $0.6990 high.

Short-term outlook: bearish while below the 6 October $0.6990 high

Medium-term outlook: bearish while below the 24 September $0.7045 high

AUD/USD daily candlestick chart

Copper loses upside momentum

The price of Copper was heading towards its 22 September $6.8181 record high but is short-term losing upside momentum. In case of a rise above this week's high at $6.6733 taking place, the metal may encounter minor resistance around the mid-August $6.6951 high and, if exceeded, between the late August-to-early September highs at $6.7401-to-$6.7696.

Minor support below the 30 September-to-5 October $6.5930-to-$6.5925 highs sits at Wednesday's $6.5097 low ahead of the 29 September $6.4872 trough. Further minor support may be found between the mid-August-to-late August lows at $6.4661-to-$6.4482.

Short-term outlook: bullish while above the 7 October low at $6.5097

Medium-term outlook: neutral with a bullish undertone while above the 29 July low at $6.2206

Copper daily candlestick chart