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While inflation will be crucial, investors should also consider personal income and spending trends. Weaker readings could signal a softer inflation outlook, supporting a more dovish Fed rate path, while upward trends in personal income/spending may fuel inflation fears.
Beyond the data, Fed speakers and US tariff developments remain key drivers for sentiment. Increased EU-US tensions could overshadow the effects of softer economic data.
Near-Term Outlook
The DAX’s near-term direction hinges on:
- German fiscal policy: Progress on a defense fund and stimulus measures could support the Index.
- US-EU and US-China tariff risks – Escalating trade tensions may pressure global equities.
- Inflation – German and US inflation figures could dictate near-term ECB and Fed rate paths.
Progress toward a sizeable defense fund, easing tariff risks, and more dovish central bank guidance could drive the DAX toward 22,750.
However, resistance to loosening Germany’s debt break, rising trade war risks, and hawkish central bank policy stances may drag the Index toward 22,000.
As of Friday morning, the DAX mini was down 138 points, while the Nasdaq 100 mini gained 11 points, signaling a choppy session ahead.
DAX Technical Indicators
Daily Chart:
Despite Thursday’s pullback, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMAs). However, rising volatility suggests potential short-term downside risks within the broader uptrend.
A breakout from 22,500 could signal a move toward 22,750. A break above 22,750 may enable the bulls to target the February 19 record high of 22,935 next.
Conversely, if the DAX breaks below 22,500, 22,150 and the 50-day EMA will be the next key support levels.
With the RSI at 62.97, the DAX remains below overbought levels (above 70), potentially allowing a move toward the 22,935 high.
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