DAX hits record high as AUD/USD bounces off support, copper rally stalls
Technical analysis of the DAX 40 as it hits another record high while AUD/USD bounces off support and the copper rally stalls.
Macro update
Wall Street finishes lower:
United States (US) equity markets closed in the red, led by financials, with the Dow Jones falling 0.8%, the S&P 500 down 0.2% and the Nasdaq 100 easing 0.1% as policy uncertainty weighed on sentiment.
Banks hit by rate cap concerns:
Bank and payments stocks sold off amid renewed focus on Donald Trump’s proposed 10% cap on credit card interest rates, with JPMorgan sliding 4.2%, Visa down 4.5% and Mastercard off 3.8%.
JP Morgan earnings mixed:
JP Morgan exceeded fourth quarter (Q4) profit forecasts but flagged softer investment banking fees, while management warned that a cap on card rates would be detrimental to both lenders and consumers.
Inflation steady:
US December consumer price index (CPI) rose 2.7% year-on-year (YoY), in line with expectations, helping to keep Federal Reserve (Fed) rate-cut expectations broadly intact despite equity market weakness.
Earnings season signals:
Delta Air Lines dropped 2.4% after issuing a weaker-than-expected 2026 profit outlook, although strategists noted that earnings revisions for 2026 are still likely to skew positive overall.
Asia firmer overnight:
Asian equities edged higher, led by a more than 1% gain in Japan’s Nikkei 225 on a weaker Japanese yen and snap election speculation, while gold and silver extended gains to fresh record highs amid elevated geopolitical tensions.
DAX 40 trades in record highs around 25,500
The DAX 40 index hit yet another record high and has risen above the 25,000 psychological resistance zone, so far to 25,507. If overcome, the 26,000 region may be next in line.
Minor support below Tuesday's 25,237 low is seen in the 25,000 region.
Short-term outlook:
Bullish while above the 9 January low at 25,108.
Medium-term outlook:
Bullish while above the 18 December low at 23,924.
DAX 40 daily candlestick chart
AUD/USD hovers above support
AUD/USD's retracement from last week's $0.6766 high - a level last traded in October 2024 - found support above its $0.6660 late December low. While it holds, the late December high at $0.6727 and Tuesday's peak at $0.6732 will remain in sight, ahead of $0.6766. If overcome, the July 2024 high at $0.6798 may be next in line.
Support sits in the $0.6664-to-$0.6660 region. If slid through, the October peak at $0.6628 may be revisited.
Short-term outlook:
Bullish while above $0.6660, eyeing the $0.6800 region
Medium-term outlook:
Bullish while above $0.6593, targeting the July 2023 high at $0.6895
AUD/USD daily candlestick chart
Copper pauses below record high
The price of copper is seen slightly coming off Tuesday's $6.1543 high. Together with the last Tuesday's $6.1123 high, this level acts as short-term resistance. If exceeded, the $6.5000 region may be next in sight.
Potential slips are expected to find at least interim support around the $5.9235 late December peak. A fall through this level may put the $5.8000 region on the map.
Short-term outlook:
Bullish, targeting the $6.5000 region while above $5.6978.
Medium-term outlook:
Bullish; eyes $6.5000 and potentially the $7.0000 region while remaining above the 29 December low at $5.5413.
Copper daily candlestick chart
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