The EUR/USD pair has broken out to the upside, and that could be part of what we are seeing in the DAX, a reaction to expensive German exports. Technically speaking, the €12,900 level underneath is supported, as drawn on the chart via the dark gray box. I think we could see a bounce towards the €13,000 level, and if we can break above there I would be a buyer. Until then, I think we will test these lows and try to break down through them. If we see a breakdown below there, I think the €12,800 level will be tested as support, and if we give way there I think that we could fall to the €12,500 level.

Pay attention to the EUR/USD pair, because if it breaks above the 1.21 handle that could be very negative for the DAX, as it means the EUR would probably continue to go much higher over the longer term, and the cost of German exports could continue to be a concern. The markets in general are healthy, so I suspect that we will eventually get to the upside, but in this thin environment it’s probably going to be difficult. I would not spend too much time worrying about the move until volume picks up, so you would be forgiven for sitting on the sidelines, as the market should offer us a nice longer-term opportunity. The market continues to be a gateway for people who wish to invest in the European Union, and therefore if the EU continues to look strong, and makes sense that eventually the DAX would pick up.

DAX Video 02.01.18

This article was originally posted on FX Empire

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