Dax 40 Explodes after US Inflation Shows Positive Signs of Easing

Dax 40, US Dollar Talking Points

  • Dax 40 roars higher before stalling at 14173.
  • S&P 500 futures rise over 4% after a downward surprise in US CPI (October) as rate hike bets for December ease.
  • US Dollar weakness and lower yields contribute to the bullish move in equities.

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US CPI Report Drives Equity Futures Higher as Dax Clears 14000

Dax futures are ripping higher after US inflation data came in softer than expected. With Core CPI falling to 6.3%, the annual inflation rate printed at 7.7%, showing promising signs of easing. The downside surprise immediately spurred a reaction in equity markets as major stock indices soared.

As expectations of a fifth 75bp rate hike dissipate, S&P 500 futures have gained over 4% while Dax follow closely behind. With the German index currently trading 3.2% higher on the day, lower US yields and a weaker Dollar continue to drive equities.

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DAX 40 Technical Analysis

After a brief retest of the 14000 psychological level earlier today, a slight pullback drove price action back towards the 13712 – 13721 that has provided resistance over the past two days. As the Dax continues to trade with conviction, the six-week rally has gained traction allowing prices to rip through two big zones of resistance at 14000 and 14052 (the 50% Fibonacci of the 2022 move).

Over the past few weeks, a rebound off the October low of 11829 has allowed Dax 40 to recover the 12% that it sacrificed during the September sell-off. Although prior trendline resistance helped cap the upward move for some time at around 13000, a hold above 13602 (the 200-day moving average) and above 14000 could allow for further gains.

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As Dax reaches a daily high of 14173, the next barrier of resistance has formed at the current daily high of 14173. With the index advancing over 19% in the past six-weeks, a break of 14200 and above 14400 could see 88% Fibonacci of the long-term move (2003 – 2021) forming another wall of resistance at 14602.

Dax 40 Daily Chart

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Chart prepared by Tammy Da Costa using TradingView




of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily -18% -5% -8%
Weekly -45% 27% -3%

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

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