DAX Tries to Defend Key Support

By Peter Bukov|

Published: October 06 2022, 13:15 GMT+0

DAX Tries to Defend Key Support


The German DAX index surged above the major support of previous lows near 12,400 EUR, but it looks like the profit-taking could bring the index back below that level.
As of writing, DAX traded 0.7% weaker on Thursday, down to 12,490 EUR ahead of the US session.

The minutes of the European Central Bank’s (ECB) September policy meeting showed that policymakers believed that the euro area might see increased inflationary pressure due to the weakening of the currency.

The policy accounts further read>

– The inflation rate was excessive and was anticipated to continue above the governing council’s goal for some time.
– The staff inflation prediction for 2024 was revised upward, but not by an amount deemed significant enough to warrant a more forceful response.
– Taking decisive action now might prevent the need for future sharper interest rate increases.
– A significant majority of members preferred hiking the benchmark ECB interest rates by 75 basis points.

US jobless claims worsen

In other news, according to the US Department of Labor’s (DoL) release of weekly data on Thursday, there were 219,000 new applications for unemployment benefits in the week ending October 1. This reading came in worse than the market forecast of 200,000 and follows the previous week’s reading of 190,000 (revised from 193,000).

The advance seasonally adjusted insured unemployment rate was 1%, according to the publication’s further information, and the 4-week moving average increased by 250 from the previous week’s corrected average to 206,500.

Battle for 12,400 

Technically speaking, the bearish trend remains intact. If DAX drops below 12,400 EUR again, we could see more solid bearish pressure, targeting the current cycle lows near 11,800 EUR.

Alternatively, a significant bounce off that support still remains possible, but bulls need to push the price above this week’s highs of 12,700 EUR to confirm the bullish narrative.