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Market Fear Ahead of US CPI, As S&P 500, DAX 30 Retreat

The DAX chart shows a continuation of the positive trend, with the price climbing to new record highs last week. However, this week we’re seeing a retreat as traders await the PPI producer inflation and the PCI consumer inflation these two days, which might send risk assets lower if they come on the strong side.

DAX 30 index has stalled the uptrend

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The Dax 30 index was trading above the moving averages (MAs) and finding reliable support. This month’s the renewed uptrend suggests robust bullish momentum, sending Dax to a new record high, as seen towards the end of the week. Notably, the recent breakout above the 20-day moving average underscores increased buying interest. Last week, the DAX index surged by 2%, culminating in an all-time high, closing the week at 18,687.

DAX 30 Chart Daily – Buyers Back in Charge

This upward movement in DAX was fueled by positive market developments and optimism surrounding the European Central Bank’s (ECB) monetary policy. Market sentiment was further buoyed by the ECB’s monetary policy meeting minutes released on Friday, which hinted at potential future interest rate reductions, contributing to the overall positive outlook for the DAX index.

Will We See A Retreat in Dax 30 After US PPI and CPI?

Besides that, the UoM consumer sentiment report from last week caught the market off guard with a significant decline, however, inflation forecasts rose to the highest in 6 months. This combination of factors painted a concerning picture for investors, leading to a dip in the S&P 500 as market participants worried about the potential for higher CPI readings in the coming week. The recent strength in stock markets, driven some weaker economic figures form the US, such as the NFP data last week, has raised expectations for inflation and potential rate cuts.

However, with significant risks associated with upcoming US producer inflation today and consumer inflation tomorrow, some traders have opted for profit-taking this week, until the data picture becomes clearer. From a risk management perspective, it may be prudent to hold on for now, so we will wait for the reports before issuing a buy signal. If the reports come in hotter than expected, leading to market declines, it could present buying opportunities at lower levels.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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