DAX Navigates Psychological Barrier After 2021 Highs

The US Dollar during the previous week grew to its highest price since March 2023 regardless of the lower inflation. The US Dollar Index this morning is currently trading at 102.60 and is slightly lower than the highs on Friday. However, investors will mainly be monitoring the price reaction as the US trading session edges closer. Investors are also largely monitoring other assets hovering at significant price levels, such as the German DAX. 

The latest data from the Consumer Price Index and Producer Price Index support a halt in the interest rate hiking cycle. Inflation declined to 4.9%, lower than markets expected, but the decline was still relatively weak. The Producer Price Index was also lower than economists were expecting. The figures point towards no further interest rate hikes and possibly a pivot in the winter months. However, certain members of the Federal Reserve remain pessimistic. For example, the Fed’s governor Mrs Bowman advised the regulator would probably have to adjust interest rates even more if inflation remains high and the labour market is strong. Other members of the committee also gave similar comments. However, this is not likely to be decided in the next 2–3 months unless we see a drastic rise in inflation. 

The cryptocurrency market is seeing a healthy increase in value after experiencing a substantial decline the week before. The price of Bitcoin this morning is increasing by 2%. The total capitalisation within the market has declined but continues to remain above $1 trillion. A positive note for Bitcoin is that the market share has continued to increase from 39% to over 46% over the past few months.

GBP/USD - Can the Dollar Keep Up Gains for a Second Week

Economic events from both sides of the Atlantic largely influenced the exchange rate between the Pound and the US Dollar. The Pound also decreased in value against the Euro, Yen and Swiss Franc. The GBP/USD this morning is increasing in value but remains lower than the previous waves. Therefore, the instrument potentially may still be within a downward trend. The significant price level is 1.24995, where the support level has flipped to resistance. For the downward trend to continue within a “traditional” trend pattern, investors will monitor the breakout level at 1.24410.

GBP/USD 2-Hour Chart on May 15th 

The US Dollar has increased in value as the earning season ends, and investors slightly lose interest in equities. In addition, investors will focus on the debt ceiling issue. If the government continues to lack progress, investors may avoid higher-risk assets and opt for the US Dollar. Nonetheless, economists believe significant progress will be made this week. Tomorrow, the US President will meet with congressional leaders. Investors will be monitoring how the value of the US Dollar changes as we edge closer to an agreement. 

The Pound came under pressure from a decline in the Gross Domestic Product Figures, but investors are happy that the UK looks likely to avoid a recession. Investors will now focus on tomorrow’s employment figures for the UK and Wednesday’s Bank of England speeches. Tomorrow, the UK’s Claimant Claims Count is expected to increase to above 30,000 for the first time this year. Investors will also be looking closely at the US’s Retail Sales figures. All three events are likely to create high levels of volatility. 

DAX Navigates Psychological Barrier

After seven weeks of consecutive price increases, the DAX ended lower for the first time. The concern for investors is the price is hovering at the previous highs from  2021. This has created a psychological level for investors that will require high investor sentiment to break these boundaries. However, this morning's price shows solid bullish price movement at the opening of the European trading session. The price has also crossed onto a higher high. However, investors will seek the price to break through resistance levels. 

DAX 6-Hour Chart on May 15th 

The DAX has been positively influenced by the quarterly earning reports from Pharmaceutical company Merck KGaA and Deutsche Telekom AG, which both reported higher earnings than analysts were expecting. Bayer AG, on the other hand, saw slightly inferior figures. This morning's stock is seeing the most substantial price increase, Siemens Energy AG and Rheinmetall AG, which are growing more than 2%.

Lastly, investors will also essentially be monitoring the future path of the ECB’s interest rate cycle. Members of the ECB have advised that prices continue to rise in the services sector as wages continue to increase. Nearly all members of the central bank back more interest rate hikes, which can pressure the stock market, but it is not yet known if the committee will opt for 1 or 2 more walks. 

Summary:

• The US Dollar increases in value despite lower than expected inflation data. Investors turn their attention to developments in the debt ceiling negotiations and how the Dollar will react.
• The Pound increase this morning, but will the exchange rate be able to cross over previous significant levels? If not, the movement continues to follow a downward trend pattern. 
• Investors will now focus on tomorrow’s employment figures for the UK and Wednesday’s Bank of England speeches. 
• After seven weeks of consecutive price increases, the DAX ended lower for the first time. The concern for investors is the price is hovering at the previous highs from  2021.