Another 48h - Over -0.5% Today! A Sign For The Whole 2025?

2025/01/06
Another 48h - Over -0.5% Today! A Sign For The Whole 2025?
“on the first day of a full week 2025 it goes down!
is this only just a fire in the straw? or more?”



The European stock markets started the first full trading week of 2025 with a lot of momentum on Monday, January 6, 2025. The Eurozone's leading index extended its gains in the afternoon after a media report initially sparked speculation about a supposedly more moderate tariff policy by the future US President. However, a denial from Donald Trump could only briefly cloud the good picture on the stock markets. Globally, the booming topic of artificial intelligence (AI) once again acted as a key driver, which was also reflected in particularly strong price gains on the technology-heavy IXIC on the US stock market. In keeping with this, tech stocks were by far ahead in the industry table here too. But that still doesn't prompt me to formulate a Daily 4XSetUp again - as already explained in the last posts of 2025. Even though today the leading index STOXX50 closed higher with a very strong +2.36% at 4,986.64 points. And thus heading back towards the 5,000 point mark, which it last exceeded almost a month ago and only briefly. However, some country indices outside the euro zone were only moderately affected by the good mood - ahead of the euro inflation data tomorrow. The British UKX gained +0.31% to 8,249.66 points. The Swiss SMI gained +0.58% to 11,691.13 points.The strong gains on the US stock exchanges as well as plans to invest billions in artificial intelligence (AI) also gave our German stock market a strong start to the week. Our DAX not only easily passed the 20,000 mark on Monday, but also closed above 20,200 points again. Its increase ultimately amounted to an impressive +1.56% to 20,216.19 points, which means our leading German index DAX is back at its highest level since mid-December 2024.

Although the mood on the stock market tends to be bullish, even if many sentiment indicators say otherwise, most stock markets, including in Europe, are trading more or less around historical highs. Even though inflation is rising again! Why? Because most members of the Governing Council of the ECB are in favor of “gradual” interest rate cuts at the upcoming meetings, i.e. h. in increments of -0.25% each next annual meeting date. However, some ECB Governing Council members, including the president of the French central bank, Francois Villeroy de Galhau, emphasize that "the option of a deeper cut in interest rates must remain on the table." Although inflation had already fallen to +1.7% in September 2024 last year, as many colleagues reported (and I admittedly did not want to believe it). This decline was due to base effects in connection with the strong fluctuations in energy costs in the recent years. As these ease, the overall inflation rate temporarily recovers. Temporary? And here lies the hare buried in the pepper! What if the ECB and/or the FED, let alone the other central banks in our so-called West, cut interest rates too early and too low? Correct - next Inflation bubble! And that would more than explain the level of yields in the various currencies and/or even Euro countries. It is therefore important to pay attention to the yield curves - even most of the financial market participants - me too - always come from the stock market! And the yields everywhere, in our so-called West, tend to be above average rather than the current interest rate. "What shows us a middle finger to the central banks! The bond market does not believe in the end of inflation, as you already do in the second half of 2024. Let alone in the course of 2025!", as my analyst friend from a cfd online brokerage told me during the Holidays, at the turn of the year, revealed. To this day I still don't want to believe it, let alone contradict it - because I don't have the arguments based on the current data. Because maybe I am only afraid, because of the inflation development of the last 3 and/or 4 months! What will we experience in the coming months - one way or another?

“The very first sentence of the September 2002 National Security Strategy (the President's annual laying out to Congress of the country's security objectives) reads, "The great struggles of the twentieth century between liberty and totalitarianism ended with a decisive victory for the forces of freedom and a single sustainable model for national success: freedom, democracy, and free enterprise."
The assumptions behind this statement are false on two counts. First, there is no single sustainable model for national success. Second, the American model, which has indeed been successful, is not available to others, because our success depends greatly on our dominant position at the center of the global capitalist system, and we are not willing to yield it.”
George Soros

• Will there be a bullish breakout above the 2024 high?
  
• Or a bearish fall back below the annual high in 2023?

The answer to one of the two questions is important - one way or another - because we will either see a confirmation of the current upward trend in price action in the DXY ? And/Or a significant break in the current upward trend? If I am not mistaken, the current upward trend is driven by two main influencing factors: firstly, because it has been intact since the annual low in 2024 (technical analysis). And on the other hand, because the trend ran before, during, and/or even after the US presidential election (political scenario), namely Trump's re-election.


109.533 : 2024/12/20 - Annual Year High 2024
108.222 : 2025/01/06 - last price action
107.348 : 2023/10/03 - Annual Year High 2023
We experienced an above-average bearish trading day on the DXY today. The price action has fallen by more than -0.5% today, on Monday the 6th january 2025. And is currently trading at 108.22 points. So the DXY is currently trading more or less in the middle between the last two annual highs in 2024 and/or even 2023. And not only that - also in the price action zone of the last two weeks in the last year of 2024. Where most traders and/or investors are usually on vacation - and the price action hardly makes any big jumps up or down. If you will, we are currently experiencing the calm before the storm! Which storm? As I tried to formulate in the two questions, this is our learning material for this week - before Donald Trump officially has the last word in the White House again on January 20, 2025. And with a majority like hardly any US president before him, if I'm not mistaken.


With best wishes and good intentions:
Aaron



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