DAX 40, AUD/USD and copper price under pressure

Macro update

Semiconductor stocks trigger a global market sell-off: A sharp decline in chipmakers weighed heavily on equity markets, with Japan's Nikkei falling almost 6% and Taiwan's benchmark dropping 5.7%, while the Nasdaq lost 1.47% overnight. South Korea's market was closed for a public holiday, concentrating selling pressure elsewhere in Asia.

Concerns over AI demand weigh on chipmakers: Despite TSMC reporting a 77% increase in quarterly profit, investors questioned the sustainability of the AI-driven rally after semiconductor stocks had gained around 70% this year. Memory-chip producers led the declines, with Japan's Kioxia plunging 16%.

Oil heads for its strongest weekly gain since April: Brent crude and WTI were both on course to rise more than 11% over the week as escalating US-Iran tensions heightened supply concerns, with reports that Tehran had asked Houthi allies to prepare for a potential closure of the Red Sea shipping route. Brent was last trading near $85 a barrel.

Yen remains close to a 40-year low: The Japanese currency traded around ¥162.40 per dollar, prompting renewed verbal intervention from Finance Minister Satsuki Katayama as investors continued to monitor the possibility of state pension funds increasing allocations to domestic assets.

Dollar holds firm as investors reassess the Fed outlook: The US dollar remained broadly steady and was on track to finish the week little changed, with softer inflation data tempering expectations for Federal Reserve tightening while safe-haven demand continued to offer support.

Gold edges higher on renewed risk aversion: Spot gold rose 0.3% to $3,981.44 an ounce as investors sought the safety of traditional haven assets amid weakness across global equity markets.

DAX 40 comes further off record high

The DAX 40's initially swift decline from its 6 July 25,900 record high seems to be resuming with pressure being put on Thursday's 24,696 low. If fallen through, the late June low at 24,548 may be hit. Failure there would probably push the 200-day simple moving average (SMA) at 24,352 to the fore.

Resistance above the mid-April high at 24,792 may be spotted around the 8 July low at 24,830 and the 25 June high at 25,088. While no rise above the 14 July high at 25,204 is seen, downside pressure is expected to retain the upper hand.

Short-term outlook: bearish while below the 14 July high at 25,204

Medium-term outlook: neutral with a bullish undertone while above the 10 June low at 24,044

DAX 40  daily candlestick chart

AUD/USD loses upside momentum

AUD/USD's recovery rally from its $0.6866 late June low, made marginally above its 200-day simple moving average (SMA) - now at $0.6885 - propelled it to a near one month high at $0.7021 before giving back some of its recent gains.

The cross so far found support between its 13 April and 11 June lows at $0.6988-to-$0.6979. Further potential minor support may be found around the 10 July high at $0.6970 and at the 7 July peak at $0.6960. While the 8-to-14 July lows at $0.6913-to-$0.6907 underpin, the short-term uptrend is deemed to stay bullish.

A rise above this week's $0.7021 high may lead to the May low and mid-June high at $0.7080-to-$0.7088 being reached over the coming weeks.

Short-term outlook: bullish while above $0.6907

Medium-term outlook: neutral while below the $0.7088 mid-June peak but above the 30 March $0.6834 low 

AUD/USD daily candlestick chart

Copper price drops sharply

The Copper price has seen a sharp fall on Thursday but seems to be levelling out above its 13 July low at $6.1208. Were this level to be slipped through, though, the 19 May low at $6.0806 and the March-to-July uptrend lien at $6.0482 may be revisited.

A drop through the next lower 8 July low at $5.9835 would likely indicate a resumption of the June sell-off which may lead to the May low at $5.7732 being reached.

Resistance may now be seen between the 28 May to 7 June lows at $6.1805-to-$6.1854 and between the 30 June and 10 July highs at $6.2309-to-$6.2435.

Only a currently no longer expected bullish reversal and advance

Short-term outlook: neutral with a bearish bias while below the 14 July high at $6.3658 but above the 8 July low at $5.9835

Medium-term outlook: neutral while trading above the 4 May $5.7732 low but below the $6.6367 early June peak

Copper daily candlestick chart