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DAX looks to GDP & CPI data. USD/JPY rises post-BoJ, US core PCE up next.
 

DAX looks to GDP & CPI data

The DAX closed modestly higher yesterday after the ECB raise interest rates by 75 basis points, as expected. An almost dovish tone from ECB governor Lagarde boosted stocks and dragged on the euro.

Today the market mood is depressed after underwhelming results from Amazon and Apple overnight, raising concerns about the broader health of the consumer. Still, the DAX is on track to rise 2.7% across the week, marking its fourth straight week of gains.

Looking ahead, German Q3 GDP data is expected to show that the eurozone’s largest economy contracted in Q3 -0.2% QoQ, after narrowly avoiding a recession in Q2.

German inflation data is also due and is expected to show CPI rose to 10.1% YoY in October.

Hot inflation and contracting growth hights the challenges for the ECB.
 

Where next for the DAX?

After rising from the 2022 low of 11810, the DAX recaptured the 20 & 50 sma but has run into resistance at the multi-month falling trendline. The bullish RSI keeps buyers hopeful of further upside.

Buyers need to rise above 13250 the weekly high and the falling trendline resistance, bringing 13575 the September high into focus.

Sellers will look for a move below the 50 sma at 12730 to open the door to 12020 the October 13 low.

(Click on image to enlarge)

USD/JPY rises post-BoJ, US PCE up next

USD/JPY rebounds off a three-week low after the BoJ kept interest rates on hold and defended its dovish monetary policy.

The Japanese central bank matched expectations keeping the benchmark interest rate at -0.1% and Yield Curve Control in place to defend the 10-year JGBs. The central bank also sounded mildly optimistic regarding the outlook for the Japanese economy, although broad fears about the outlook were also mentioned.

The USD is rising versus major peers today, extending gains from yesterday after US GDP came in higher than expected.

Today all eyes are on US core PCE, the Fed’s preferred inflation gauge, which is expected to rise again to 5.2% YoY in September, up from 4.9%. This data is unlikely to alter market expectations for a 75 basis point hike from the FOMC next week. However, hot core PCE could alter expectations for the December meeting, which is what is driving the markets now. Hot inflation could boost the USD/JPY.
 

Where next for USD/JPY?

USDJPY rebounded lower from 151.95, the 2022 high, falling below the 50 sma before finding support on the 3-month rising trendline support. The long lower wick on the candle suggests that there was little acceptance at the lower levels.

Buyers will look for a move back over the 20 sma at 147.05, in order to bring 150.00 round number back into focus.

Should the bears defend the 20 sma, sellers could look to support at 145.20, the rising trendline, and the weekly low. A break below here creates a lower low.

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