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US Manufacturing and Trade Developments in Focus
The focus now shifts to the Dallas Fed Manufacturing Index, out on Monday, April 28. Economists expect the Index to rise from -16.3 in March to -15 in April. A higher print could boost demand for risk assets as trade tensions ease. Conversely, a softer reading may raise recession fears, potentially impacting risk sentiment.
Trade developments will be a key driver for market trends. A further de-escalation in trade tensions between the US and the EU would likely boost demand for German-listed stocks.
Valdis Domrovskis, EU Commission Commissioner for Economy and Productivity, commented:
“The EU is willing to reach mutually agreeable solution on tariffs, for the sake of European and US people.”
Dombrovskis spoke in an interview with CNN, stating that the EU remains subject to US tariffs while the EU has suspended tariffs on US goods in hopes of reaching an agreement before the 90-day deadline.
DAX Outlook: Watching Macro and Central Bank Cues
The DAX’s near-term trajectory hinges largely on central bank commentary and trade developments.
Potential DAX scenarios include:
- Bullish Case: A de-escalation in the US-EU and US-China trade wars or dovish central bank guidance could push the DAX toward 22,500.
- Bearish Case: An escalation in trade tensions or hawkish central bank rhetoric may drag the DAX below 22,000.
As of Monday morning, the DAX futures were up 28 points, while the Nasdaq 100 mini dropped 120 points, indicating a volatile session.
Technical Setup: Cautious Optimism
According to the daily chart, the DAX continues to trade above the 50-day and the 200-day Exponential Moving Averages (EMA), reaffirming underlying bullish momentum.
- Upside Target: A break above the April high of 22,574 could signal a move toward 22,750. A decisive breakout from 22,750 may pave the way for a retest of the record high of 23,476.
- Downside risk: A drop below 22,000 could enable the bears to target the 50-day EMA, with 21,500 as the next key support level if selling intensifies.
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