The DAX 40 has broken below its 25,176-to-25,164 support zone and now looks set to slide toward the 200-day moving average near 24,829. A failure to hold there would open the door to the July lows, while the broader pullback lines up with US Treasury yields climbing to their highest level since 2007, a weaker AUD/USD and a retreating copper price.
DAX 40 breaks below key support
The DAX 40 has dropped below its 25,176-to-25,164 support zone, a level built from the mid-June high and the September lows. Because of inverse polarity, that former support band is now expected to act as resistance capping any rebound.
The index is seen sliding toward the 200-day simple moving average at 24,829, around which it may at least short-term stabilize on that moving average. If not, the July lows at 24,697-to-24,651 may be reached next.
The short-term outlook stays bearish while the index trades below the 29 September high at 25,617. The medium-term view remains bearish below the 17 September high at 25,800, targeting the late June low at 24,548.
Treasury yields climb as inflation data cools
The slide comes as the US 10-year Treasury yield climbed to 5.31%, its highest level since 2007, even after August inflation came in softer than expected. Investors remain focused on persistent price pressures, higher oil costs and the prospect that rates stay higher for longer.
Softer inflation did reduce bets on an October Federal Reserve rate increase, though markets continued to price a high probability of a December hike, which helped the US dollar reach three-month highs.
Oil moved the other way: Brent crude slipped toward $97 a barrel as recovering Gulf exports and an unexpected rise in US inventories eased supply concerns, even after Brent gained around 14% in September.
AUD/USD and copper slide alongside the index
AUD/USD has fallen nearly 4% from its $0.7238 early-September high and is fast approaching the July low at $0.6923; a break there would put the March low of $0.6834 back in sight. IG keeps a bearish short- and medium-term outlook on the pair while it trades below the 24 September high at $0.7045.
Copper is still seen coming off last week's $6.8181 record high, even as it tries to find support near $6.5000. The medium-term outlook stays neutral with a bullish undertone while the metal holds above the 29 July low at $6.2206.
Source: IG – News and trade ideas
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