EU Open: DAX below 19,000, FOMC on the agenda

Markets were let down by China's absence of further stimulus measures overnight. After a briefing, the National Development and Reform Commission did not present any new plans, which caused stocks to decline throughout the region as well as causing for moderate losses which steeped over into the European markets.

After returning from their Golden Week vacation, mainland Chinese indexes had a strong opening rally before retreating after the briefing. The decline in household spending in Japan made matters worse. While investors around the world continue to wait for Israel's "imminent" reaction to Iran's attacks from last week,

Wall Street saw indices drop yesterday due to rising oil prices and Treasury yields. There are still more Fed speakers planned for today, but the US CPI on Thursday and the opening of earnings season on Friday are the week's big events.

Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, is scheduled to speak at the Community Bankers Symposium in Chicago on the state of the economy and monetary policy. Following Fed Chairman Jerome Powell's dovish remarks about future monetary policy action and last week's strong non-farm payrolls (NFPs) gains, traders will be watching to see if either of these two officials can provide more details about the size of the next rate cut at the FOMC meetings in November–December.

Joachim Nagel, the president of the Deutsche Bundesbank, is scheduled to appear at the Bundesbank's Capital Reception in Berlin, where he may offer additional perspectives on the state of the German economy. Over the past two years, this long-standing European powerhouse has stalled as the industrial sector has severely contracted. During this speech, there could be more volatility in the Euro.

On the agenda today

11:00 – EU - Eurogroup Meetings     

11:15 – EU - ECB McCaul Speaks 

13:30 – US – Exports

13:30 – US – Imports

17:45 – US – FOMC Member Bostic Speaks             

18:00 – EU – German Buba President Nagel Speaks 

DAX Technical Analysis

We broke through the 19,000 support once more. This is a critical level as it indicates the trend established since October 2023. The DAX is currently on the 20 EMA line and could break through from here. However, the EMA’s 50, 100 and 200 are still below the current price. On the 4^th of October the price went below the 19,000 level albeit temporarily and acted as a jumping board to reach higher, however the brief did not continue and so the last trading day also finished in the red and closed slightly higher than the open of the 4^th.

If renewed strength comes at these levels due to a positive interpretation of today’s speakers, then the Stochastic RSI could act as the approval, due to being in the oversold areas so if the crossing of the fast Stochastic RSI line verifies a pickup of buying by crossing over the slow Stochastic line and thus escaping from the oversold area, we could have an indication of a move higher.

In this scenario, the 19,250 level will be the first level of resistance, while the second resistance level could be seen as the 27^th September high at 19,500. Impulses in either direction could be introduced by todays speech of ECB-Member McCaul, as well as the US Imports/Exports and trade balance. As well as speeches held by German Bundesbank members: Balz, Mauderer and Nagel.