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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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DAX, GBP/USD Forecast: Two trades to watch

Article By: ,  Senior Market Analyst
Thursday 1:47 PM

DAX rises ahead of inflation data

The DAX is rising after two straight days of declines as the mood brightens. A surge in tech stocks has fueled a rebound in the DAX on reports that US restrictions on semiconductor equipment and AI memory chip sales to China could be less strict than initially expected. Infineon and SAP have risen sharply on the open. The auto sector also booked gains.

Attention now turns to German inflation data, which is expected to rise 2.2% annually in November up from 2% in October.

The data comes ahead of December's ECB interest rate decision. The central bank is expected to cut rates, but the market is unclear whether policymakers will opt for a 50- or 25-basis-point rate cut.

Hotter than expected could fuel the case for a 25 basis point reduction. However, the policymaker will be mindful of the deteriorating economic situation in the region.

Yesterday, German consumer confidence plunged to a nine-month low, dropping to -23.3 from -18.4.

The majors deteriorating amid concerns over the outlook for jobs and amid her session worries.

Eurozone economic sentiment data is due later today and is expected to show intent weakening.

Meanwhile, the U.S. markets are closed and observance of Thanksgiving.

DAX forecast – technical analysis

DAX has fallen from its all-time high but continues to trade within a familiar range, capped on the upside at 19,500 and by 19,000 on the downside. The long, lower wicks on recent candles suggest that selling demand was weak at those lower levels.

Buyers supported by a rise above the 50 SMA and the RSI above 50 keeps buyers focused on the 19500 resistance. A rose above here brings 19,684 and fresh record highs into focus.

Sellers will need to close below 19000 to bring 18,800 the 100 SMA and the November low into focus.

GBP/USD falls after stronger US data & UK service sector gloom

GBP/USD is falling lower, snapping a three-day winning run as the sell-off in the US dollar steadies. However, trading volumes will likely be thin due to the Thanksgiving holiday

The U.S. dollar is heading higher, recovering from a two-week low after a series of strong data raises questions over the Fed's outlook for interest rate cuts.

US core PCE, the Fed's preferred gauge for inflation, rose by 2.8% as expected, up from 2.7% in September. Meanwhile, the US Q3 GDP was also revised higher, although durable goods orders were weaker than forecast.

The market is pricing in the 60% probability that the Fed will cut rates by 25 basis points to 4.25% to 4.5% in the December meeting up from a 56% probability just a week ago.

Meanwhile, the pound has been supported this week by comments from Bank of England deputy governor Claire Lombard Ellie on Monday. She supports a gradual reduction of monetary policy due to a stickiness in inflation.

Meanwhile, UK service sector sentiment has fallen at its fastest pace in two years, according to the Confederation of British Industry.

The sharp downturn is partly a result of tax rises announced in Finance Minister Rachel Reeves's budget on October 30th. Falling sentiment and weak hiring intentions pave a weak outlook for the UK's dominant sector. The gloom comes after last week's services PMI contracted for the first time in 13 months.

Looking ahead, there are no major economic announcements due today or tomorrow.

GBP/USD forecast - technical analysis

GBP/USD fell from a peak of 1.3420 to a low of 1.25 in less than two months. The price has recovered from the 6-month low of 1.25, rising back above the 1.26 level and the trendline dating back to 2021. However, failure to retake the 1.27 level, combined with the 50 SMA crossing above the 100 SMA and the RSI below 50, keeps sellers hopeful of further losses.

Support can be seen at 1.26 and a break below 1.25 is needed to create a lower low and bring 1.23 into focus.

 

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