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Beyond economic data, traders should closely monitor tariff developments and FOMC commentary. A retaliatory response from the EU or China could accelerate the sell-off.
On Thursday, Trump warned:
“If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!”
Near-Term Outlook
The DAX’s path will depend on central bank policies, economic data, and trade developments:
- Bearish Scenario: Escalating US-EU trade tensions, weaker economic data, and hawkish central bank rhetoric could push the DAX toward 22,000.
- Bullish Scenario: Dovish central bank chatter, easing trade tensions, and upbeat economic data could drive the DAX toward its record high of 23,476.
As of Thursday morning, US futures pointed to a cautious open, with the Nasdaq 100 mini down 16 points.
DAX Technical Indicators
Daily Chart
Despite Wednesday’s sell-off, the DAX remains above the 50-day and 200-day Exponential Moving Averages (EMAs), signaling strong bullish momentum. However, economic data and tariff-driven volatility raise short-term downside risks.
If the DAX returns to 23,000, the bulls could target the record high of 23,476 next. A breakout above 23,476 may bring 23,750 into play.
Conversely, a DAX drop below 22,500 may enable the bears to target the 50-day EMA. A fall through the 50-day EMA could bring 22,000 into view.
The 14-day Relative Strength Index (RSI) at 47.94 indicates the DAX could drop to 22,000 before entering oversold territory (RSI< 30).
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