DAX News and Analysis

  • ECB Raises all three interest rates by 50bps.
  • Anti-fragmentation tool, Transmission Protection Instrument (TPI) to be launched at 15:45 CET
  • Russia resumes Nord Stream gas flow, bringing Europe short-term respite.

Quantitative Tightening: What is it and How Does it Work?

DAX 40: Stalls and Retreats as Outsized ECB Rate Hike Fails to Convince.

The Dax declined on the information of a 50 foundation level hike by the European Central Bank earlier than recovering and posting modest features. Sentiment continues to flip flop between features and losses with European Central Bank (ECB) President Christine Lagarde’s opening line in her speech by stating that development within the Eurozone is exhibiting indicators of slowing.

Italian Prime Minister Mario Draghi resigned as the nation’s prime minister, setting the stage for snap elections and threatening to unleash a recent section of turmoil for the nation’s debt. In the wake of Draghi’s resignation, the yield on Italy’s 10-year notice jumped as a lot as 21 foundation factors to three.6%, its highest since June. The unfold over equal German bonds, a typical gauge of danger, rose to 233 foundation factors. In response the ECB is making an attempt to defend probably the most susceptible eurozone members from market hypothesis by way of a brand new disaster administration software.If the ECB’s software is profitable in leveling the enjoying discipline for international locations with larger borrowing prices, and Russia retains up fuel exports, prospects for European markets are “very, very good,” mentioned Andrew Sheets, Morgan Stanley’s chief cross asset strategist.

Sentiment in European markets had opened with a constructive tone after Russia began sending fuel by way of its largest pipeline to Europe after a 10-day upkeep interval, based on a spokesperson for the pipeline operator Nord Stream. However, the German Energy Regulator says if Russian provides through Nord Stream 1 stay at present ranges, 90% storage ranges by November will hardly be reachable with out further measures. An entire shutdown of Russian provides will put Germany vulnerable to shedding virtually 5% of its financial output, the International Monetary Fund warned. This will do little to ease fears across the continuity and potential rationing of fuel provides.

DAX 40 Daily ChartJuly 21,2022

Source: IG

DAX 40 2H Chart – July 21, 2022

DAX 40 Latest: Marginally Lower as ECB Surprises with Outsized Rate Hike

Source: IG

From a technical perspective, Yesterday noticed a rejection of the 50-SMA earlier than a bearish every day candle shut beneath the resistance space of 13300. On an Intraday perspective we now have as soon as once more examined the resistance space 13300 whereas rejecting the 20-SMA on the 2H chart. We could effectively see a bounce of the 50-SMA on the 2H chart earlier than a push down towards our key psychological 13000 stage. A break and shut beneath may open up decrease costs and probably a retest of the year-to-date lows.

Key intraday ranges which can be value watching:

Support Areas

Resistance Areas

Written by: Zain Vawda, Market Writer for DailyFX.com

Contact and observe Zain on Twitter: @zvawda

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