Dax follows Wall Street lower, ZEW Economic Sentiment up next. Gold struggles at 200 day moving average ahead of CPI data.

Pixabay

Dax follows Wall Street lower, ZEW Economic Sentiment up next 

After a steep sell off overnight on Wall Street as inflation fears creep higher, the German Dax, along with European peers is tanking lower. 

High growth tech stocks are expected to take the biggest hit, in light of the Nasdaq’s -2.5% decline as investors turn their attention away from growth to value. 

German ZEW Economic Sentiment Data will be in focus after falling in April on covid & lockdown concerns. The headline figure is expected to tick higher to 71 in May, up from 70.7. 

Where next for the German Dax? 

 After breaking above the key 15,000 level in early April, the Dax has struggled to make any clear directional progress.  

However, panning out, the DAX trades in a clear up trend from the mid March pandemic lows. It trades above its 50 EMA on the daily chart and is currently testing the 20 EMA at 15200. The uptrend remains in tact for now. 

Round number 15000 provided resistance on the Dax’s run higher. It is expected to provide support on the way down. It would take a move below this level to see the sellers gain traction and head towards 14400 the ascending trendline support dating back to mid-March and horizontal support from mid-March.  

A break above the all time high of 15500 is needed for the Dax to push northwards (DAX). 

Gold could struggle at 200 day moving average ahead of inflation data 

Whilst inflation fears have sent stocks tumbling over, treasury yields have remained steady below 1.60%.  

The weak US jobs report reassured the market that the Fed will keep interest rates low for longer benefiting no yielding gold.  

The deterioration in risk sentiment overnight is likely to underpin the safe haven, although the mild lift in the US Dollar could weigh on the precious metal. 

Gold could struggle to push beyond the 200 SMA ahead of tomorrow’s CPI data.  

Fed speak & JOLTS numbers will be in focus later. 

Where next for Gold? 

After forming a double bottom, gold has been on a run since March. The precious metal trades above its multi-month ascending trendline and hit a 3 month high in the previous session (GLD). 

The RSI is supportive of further gains whilst it remains out of overbought territory 

Buyers will be looking to retake the 200 SMA on the daily chart at 1850 to open the doors to 1875 the year to date high. 

On the down side, it would take a move below 1815 to negate the near term run higher. Beyond here 1800 offers strong support as a round number, resistance from April and the ascending trend line support.