Having been one of the worst performing indexes since the beginning of July it was perhaps fitting that the German DAX led yesterday’s sharp rebound after hitting a low of 8,903 on Friday. A gain of 1.9% saw the DAX post its best one day performance since 22nd April this year as concerns about a potential Russian invasion of Ukraine ebbed away after Friday’s reported pullback of troops, while continued US airstrikes in Iraq served to help push back insurgent forces away from Irbil. That being said concerns remain with Ukrainian officials claiming that up to 45k Russian troops still remained close to the border, a claim that was supported by the head of NATO Anders Rasmussen, who maintained his belief that there remained a high probability of a Russian incursion under the guise of a humanitarian operation. Nevertheless the various parties do appear to have agreed on an aid convoy led by the Red Cross into the worst affected areas of Ukraine. While the recent geopolitical concerns have weighed on the DAX more than most, the German market had already started to roll over long before the announcement of last week’s Russia sanctions, as concerns about the recovery of the German economy in Q2 had started to surface. Lacklustre business surveys along with disappointing industrial production and factory orders data in consecutive months were early clues, as was a slow erosion in confidence in the German economy as investor and business sentiment surveys started to weaken. With that in mind, today’s ZEW economic sentiment survey for August is expected to show a weaker reading for the eighth month in a row, and the lowest reading since December 2012, coming in at 18.2, down from 27.1 in July. Given the declines in the DAX seen over the past two weeks it would be no surprise if the reading were to come in much lower than expected. While yesterday’s gains were welcome the key question now being asked is whether yesterday’s rebound is anything more than the proverbial dead cat bounce. Given that US markets closed well off their highs yesterday the worry is that it could well be, especially since bond markets stayed fairly well supported, and this morning Europe’s markets look set to open slightly lower, as investors look towards this week’s European macro data starting with today’s European ZEW survey’s. We culminate on Thursday with the latest Q2 GDP numbers from France, Germany and the EU. These are expected to be disappointing and could well be a key barometer as to the next move in equity markets. EURUSD – after the hammer on the daily candle chart last week we have seen a minor pullback to 1.3430, but we still remain below the resistance at 1.3475, which we need to overcome to target a stronger rebound. We need to see a move back through 1.3500 to retarget the 1.3570 level and then on to 1.3640. Support at last week’s lows at 1.3333 GBPUSD – a fairly tight range yesterday the pound needs to overcome the 1.6820 area to avoid a test of the May and June lows at 1.6700, a break of which could see further losses. Any rebound now needs to get above 1.6820 to retarget a move back towards 1.6920 and then 1.7000. EURGBP – the euro appears to have found a short term base for now but needs to get through 0.8000 to target a move towards 0.8030 initially and then 0.8085 the May lows. Downside support comes in at 0.7920 and the lows last month at 0.7874. USDJPY – continues to remain susceptible to US yields after last week’s failure at 103.00/10 the US dollar has slipped back but found support in the mid 101’s. There is nothing to suggest though that we won't continue to trade within the broad range that we've been in over the last six months. We have resistance at 103.00, and support at 101.20. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.