Troughs and Turmoil for GER40

Piece written by Alexa Smith, Trive Financial Market Analyst 

The GER 40 Futures (EUREX: FDAX) experienced a slight uptick ahead of forthcoming labour market data in the US, which is expected to indicate a moderation in job growth in September from 187K to 170K. This expected slowdown is providing relief to the equity market, which has been grappling with concerns about persistently elevated interest rates. 

Earlier in the week, the GER 40 touched a six-month low, coinciding with a surge in US and European bond yields to multi-year highs. These developments were driven by the prevailing expectation that borrowing costs would remain elevated over an extended period. All eyes are now focused on the imminent release of NonFarm Payrolls, as it carries significant implications for the potential actions of the Federal Reserve in the coming month.  


The GER 40 Futures approached a 6-month low on Wednesday after PMI data in Europe slipped further into contraction. With the forthcoming NFP data expected today, the index futures may attempt to retest the 15425 level at the 23.60% Fibonacci Retracement if the data aligns with expectations. However, a surge could solidify a hike from the Federal Reserve and see the index futures fall towards the 15070 level.  

The divergence of the 50-day moving average from the 100-day moving average supports the continuation of a descending channel pattern, placing the channel’s lower boundary as a likely point of interest if a breakdown of the 15070 level occurs. In this case, a broader downtrend could play out. Alternatively, a surge towards the 15425 resistance may bring the index futures within reach of the 50-day moving average, which could mark a pivot point for a reversal.  


The GER 40 Futures flattened ahead of the forthcoming NFP data. A reversal may be on the cards if the NFP data aligns with expectations. However, a surge will support the likelihood of an additional rate hike from the Federal Reserve and see a potential pullback towards the 15070 support.  

Sources: TradingView, Reuters