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Additionally, economists forecast the ISM Services PMI to increase from 54.1 in December to 54.3 in January. A pickup in service sector activity, hiring, and prices would likely signal a more hawkish Fed policy stance. PMI trends will influence inflation and policy outlooks since the services sector accounts for 80% of the US economy.
However, an unexpected fall in the headline PMI, staffing levels, and input prices may support a more dovish Fed rate path.
Investors should also monitor tariff developments and FOMC members’ commentary for further monetary policy insights.
Near-Term Outlook
The DAX’s performance will depend on Services PMIs and key US economic indicators.
- Weaker Services PMI figures and softer US labor market data may drive the DAX toward 22,000.
- Stronger Services PMI and rising US employment could impact rate-sensitive German stocks, potentially pulling the Index toward 21,000.
External factors, including potential stimulus from Beijing and US tariffs, will influence DAX trends. Chinese stimulus could support German exports, while US tariffs may pose risks.
As of Wednesday morning, futures signaled a testy start. DAX futures were down 93 points, while the Nasdaq 100 mini tumbled 132 points.
DAX Technical Indicators
Daily Chart
Despite US tariff developments, the DAX sits well above the 50-day and 200-day Exponential Moving Averages (EMAs), affirming bullish price signals.
A breakout from 21,500 would support a move toward the January 31 record high of 21,801. A return to 21,801 may enable the bulls to target the 22,000 level next.
Conversely, if the DAX drops below 21,500, it could signal a fall toward the key support level at 21,000.
With the 14-day Relative Strength Index (RSI) at 67.70, the DAX could climb to 21,801 before entering overbought territory (above 70 RSI).
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