DAX 40 subdued as AUD/USD, copper range trade
Technical analysis of the DAX 40, AUD/USD and copper, now that US traders are returning to the markets after Monday’s President’s Day.
Macro update
Nikkei extends declines:
Japan’s Nikkei 225 dropped 0.6% to 56,451, marking a fourth consecutive fall, while the broader Topix eased 0.4% in the absence of fresh catalysts.
SoftBank weighs on the index:
SoftBank Group slid 4.6%, knocking roughly 170 points off the Nikkei, with Kawasaki Heavy Industries and Recruit Holdings also losing around 4%.
Post-election momentum fades:
Last week’s rally following Prime Minister Sanae Takaichi’s election win has stalled, with analysts pointing to technical pressures and weak supply-demand dynamics.
Selective strength in pharma and materials:
Sumitomo Pharma gained 6% ahead of a health ministry review of its Parkinson’s treatment, while Sojitz and Sumco advanced on rare-earth and semiconductor-related developments.
Dollar steady ahead of key releases:
The US dollar index held at 97.12 in thin trading, as investors awaited Federal Reserve (Fed) minutes and US fourth-quarter (Q4) gross domestic product (GDP) data later this week.
Rate-cut expectations hold firm:
Markets continue to price about 62bp of Fed easing this year, with an 80% probability of a June cut, while the Japanese yen steadied at 153.28 per dollar after weak Japanese GDP figures.
DAX 40 comes off February high
The DAX 40 is falling once more with the 55-day simple moving average (SMA) and the November to February support line at 24,538 - 24,460 potentially being revisited this week.
Minor resistance may now bee seen in the 24,750 - 24,835 region where the last few days' daily lows were made.
Short-term outlook:
Toppish while below 25,021, Monday's high.
Medium-term outlook:
Bullish while above the 5 February low at 24,491.
DAX 40 daily candlestick chart
AUD/USD range trades below multi-year high
Over the past few days, AUD/USD has been gradually coming off last week's $0.7147 multi-year high but found support around its early February $0.7050 high.
The January-to-February support line at $0.7016 may nonetheless be tested if the gold price were to slide further.
Above $0.7147 lies the January 2023 peak at $0.7158.
Short-term outlook:
Neutral with a bullish bias while above $0.7016, targeting the $0.7100 - $0.7158 region.
Medium-term outlook:
Bullish while above $0.6897, targeting the January 2023 peak at $0.7158.
AUD/USD daily candlestick chart
Copper remains sidelined
The copper price has been drifting lower but is trying to hold in the $5.7000 region, around the 22 January low. Further down lies more significant support at the $5.5950 - $5.5640 early February lows.
Minor resistance may be spotted along the 55-day simple moving average (SMA) at $5.8225.
Short-term outlook:
Bearish, slipping towards the $5.5950 - $5.5640 support area.
Medium-term outlook:
Neutral while above support at $5.5950 - $5.5413; a fall through the late December low would make us bearish, though.
Copper daily candlestick chart
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