DAX With The Help From German-French Eurobond Plans Soon Back At 12,000 Points?


The German DAX30 started the last week of trading with massive gains. While we pointed out in our last weekly market outlook that:

[…]we are still careful in terms of DAX30 CFD long engagements, even though short-term and technically we stay positive as long as the German index trades above 10,200 points.[…]

we did not expect gains of more than 5% into the start of the week.

The main driver wes the comments from Fed chairman Powell on CBS' "60 Minutes" and Merkel's and Macron's proposal of a 500 billion EU recovery fund that would offer grants to European Union regions and sectors hit hardest by the coronavirus pandemic.

In fact, this move moves the EU more in the direction of a transfer union and can be interpreted as bullish for Equities.

If the bullish momentum continues over the next few days and the DAX30 breaks above the April highs around 11,350 points, a re-test of the SMA(200) around 12,000/050 points is a realistic option.

If the DAX30 on the other hand fails to break higher, a re-test of the region around 10,200 points is likely, initiated by disappointing news around developments respectively missing progress in terms of a Coronavirus vaccine as last Tuesday with Moderna's vaccine trial not working as well as expected:

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Daily chart (between February 5, 2019 to May 22, 2020).

In 2015, the value of the DAX30 CFD increased by 9.56%, in 2016, it increased by 6.87%, in 2017, it increased by 12.51%, in 2018, it fell by 18.26%, in 2019, it increased by 26.44% meaning that after five years, it was up by 34.2%.

US Dollar

And again: when looking at the USD Index Future, the picture hasn't significantly changed over the last few days, but with the Euro about to gain momentum against the Greenback, the USD Index Future could see a sharp drop back below 100.00 points in the days to come.

Our USD skepticism was elevated again, by Fed chairman Powell's appearance on CBS' "60 Minutes" on May 17.

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Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") ...

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