DAX 40 recovers as AUD/USD range trades and copper price retreats

Macro update

Israel-Lebanon ceasefire weighs on oil prices: Brent crude fell below $96 a barrel after Israel and Lebanon agreed to implement a ceasefire, boosting optimism that a wider diplomatic breakthrough between Washington and Tehran could eventually lead to the reopening of the Straits of Hormuz.

Asian equities retreat as geopolitical tensions dampen risk appetite: MSCI’s Asia-Pacific index excluding Japan declined 1.6%, South Korean stocks dropped as much as 2.6% after returning from a public holiday, and Japan’s Nikkei fell 1.4% as renewed US-Iran hostilities prompted investors to reduce exposure to risk assets.

Broadcom disappointment pressures AI sector sentiment: Shares in Broadcom tumbled more than 13% in after-hours trading after the company missed second-quarter revenue forecasts, while its decision to leave its 2027 sales outlook unchanged raised concerns that growth momentum may be slowing across the AI industry.

Dollar remains supported near recent highs: The dollar index traded around 99.45, close to its strongest level since early April, as ongoing tensions in the Gulf continued to underpin demand for safe-haven assets and support the US currency.

Yen stays close to intervention territory: The Japanese yen hovered just below the ¥160 per dollar level, widely seen as a potential trigger for official intervention, after Bank of Japan Governor Kazuo Ueda reinforced expectations of a near-term interest rate increase with a more hawkish stance on inflation.

Bitcoin falls to its lowest level in four months: The cryptocurrency dropped to its weakest level since February before recovering towards $64,000, having fallen as much as 17% over five consecutive sessions amid a stronger dollar, rising bond yields and broader risk aversion across financial markets.

DAX 40 tries to find support

The DAX 40 has been retreating over the past week or so, following its recent strong advance.

While it remains above this week's 24,762 low, a recovery towards the late May low at 24,973 is expected to be witnessed. Further up lies the high point of the current June gap at 25,062 which represents another potential upside target.

Only a fall through this week's low at 24,762 would be short-term bearish and may provoke a slide to the 21 April high at 24,606.

Short-term outlook: neutral while trading above the 3 June low at 24,762

Medium-term outlook: bullish while above the 30 April low at 23,716

DAX 40  daily candlestick chart

AUD/USD consolidates

Even though AUD/USD remains above its 55-day simple moving average (SMA) at $0.7107, it continues to trade sideways between its recent high at $0.7200 and its mid-May $0.7080 low.

In the short-term the 55-day SMA may well be revisited, though.

Short-term outlook: neutral while below its 29 May high at $0.7200 high but above the 19 May low at $0.7080

Medium-term outlook: bullish while above the 19 May low at $0.7080

AUD/USD daily candlestick chart

Copper price comes off resistance

Copper's recovery from last week's $6.1805 low has taken it to $6.6367 on Tuesday, a new record high and marginally above the $6.6328 May peak, before slipping towards the mid-May high at $6.2762.

Were it to give way, last week's low at $6.1805 may be revisited. If also slipped through, support in the $6.1505-to-$6.0806 region may be tested.

In case of a new all-time high being made, the minor psychological $7.0000 region may be in sight.

Short-term outlook: bearish while below $6.6367

Medium-term outlook: bullish while trading above the 19 May $6.0806 low

Copper daily candlestick chart