Open an Account
☰
Open an Account
✖

EUR/USD, DAX Forecast: Soft US Data Drives EUR/USD Higher and DAX to Record

Article By: ,  Head of Market Research
May 15, 2024 11:17 AM

EUR/USD, DAX Key Points

  • The 1-2 combination of soft CPI and retail sales has made the US dollar the weakest major currency on the day and set off a rally in global stocks
  • EUR/USD’s breakout above 1.0800 marks a significant technical move and should keep the market in “buy the dips” mode as long as rates remain above it.
  • Germany’s DAX is likewise at record highs, with bulls watching 18,960 and 19,380 as the next levels of interest.

This week’s most highly-anticipated economic data is now behind us, and traders now believe that the US economy may be growing more slowly than they thought when they woke up this morning.

The US CPI report for April came in mostly as expected, with one exception: The month-over-month reading in the headline CPI came in a tick below expectations at 0.3% m/m vs. 0.4% eyed. Though the year-over-year print met expectations, as did both the m/m and y/y calculations of the “core” (ex-food and -energy) readings.

Taking a step back, the decline in the year-over-year Core CPI reading to 3.62% is a significant drop from last month’s 3.8% reading and represents the lowest core inflation reading in 3 years. Combined with this morning’s miss in April Retail Sales (0.0% m/m vs. 0.4% expected), the odds of another spike in inflation are fading, and the Fed is seen as more likely to cut interest rates in Q3, November at the latest. The 1-2 combination of soft CPI and retail sales has made the US dollar the weakest major currency on the day and set off a rally in global stocks.

US Dollar Technical Analysis – EUR/USD Daily Chart

Source: TradingView, StoneX

For the world’s most widely-traded currency pair, another round of dollar weakness is just what EUR/USD bulls ordered. The pair rallied above key resistance near 1.0800, marked by the confluence of the 200-day MA and the year-to-date bearish trend line, yesterday, opening the door for continued strength today after the softer-than-expected US data.

Moving forward, EUR/USD bulls will next navigate the early April highs in the 1.08975 area. With only second-tier data on tap for the rest of the week, traders could look to take profits off this resistance level in the latter half of the week, leading to a slight pullback in the pair. From a bigger picture perspective though, this week’s breakout above 1.0800 marks a significant technical move and should keep the market in “buy the dips” mode as long as rates remain above it.

German DAX Technical Analysis – DAX Daily Chart

Source: TradingView, StoneX

Often, strength in the euro leads to weakness in Germany’s DAX as the export-oriented companies that make up the index may have more difficulty profitably selling their goods abroad. However, when EUR/USD is rallying primarily on US dollar weakness (and associated expectations for more easing from the Fed), the DAX can buck the trend, as we’re seeing today with the German index at record highs.

Tautologically, there are no resistance levels to watch when a market is at record highs, but using the Fibonacci extensions of the April pullback highlights 18,960 (127.2%) and 19,380 (161.8%) as levels of interest ahead of the 20,000 round figure. At this point, only a break back below previous-resistance-turned-support 18,525 would erase the near-term bullish bias in the index.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.

© FOREX.COM 2025