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However, Trump’s tariff warning overshadowed expectations of a more dovish ECB stance.
ECB President Lagarde in Focus
On Monday, May 26, ECB President Christine Lagarde is scheduled to speak. Lagarde’s reaction to Trump’s tariff threat and her insights into its potential impact on the ECB’s policy stance will influence sentiment. Support for multiple rate cuts to bolster the Euro area economy could provide market relief, while calls to delay further policy moves may pressure German-listed stocks.
Wall Street Slides as Trade Tensions Intensify
US markets stumbled on May 23 as markets reacted to Trump’s tariff threat. The Nasdaq Composite Index dropped 1%, while the Dow and S&P 500 fell 0.61% and 0.67%, respectively.
Upbeat US housing sector data failed to improve risk sentiment. New home sales surged 10.9% in March after rising 2.6% in February, signaling robust demand. Economists consider the housing market a barometer of the US economy.
The US markets are closed for the Memorial Day holiday on May 26. However, trade developments and Fed comments will influence demand for DAX-listed stocks.
DAX Outlook: Key Catalysts Ahead
The DAX’s near-term outlook hinges on trade developments, economic indicators, and central bank signals.
- Bullish Case: Easing trade friction, positive Euro area economic data, and dovish central bank signals could send the DAX toward 24,500
- Bearish Case: Rising trade tensions, weak economic data, or hawkish central bank cues could drag the DAX toward 23,500.
As of Monday morning, the DAX futures jumped 321 points, while the Nasdaq 100 mini rose 321 points, suggesting a positive start to the week. Reports of President Trump agreeing to delay 50% tariffs on the EU from June 1 to July 9, lifted risk sentiment.
Technical Setup Suggests Cautious Optimism
Despite Friday’s sell-off, the DAX continues trading above the 50-day and the 200-day Exponential Moving Averages (EMA), supporting a bullish bias.
- Upside Target: A return to 24,000 would support a break above the May 21 high of 24,152, opening the path to 24,350. A sustained move through 24,350 could bring 24,500 into sight.
- Downside risk: A break below 23,500 could expose 23,000, with further support at the 50-day EMA.
The 14-day Relative Strength Index (RSI) at 59.72 suggests the DAX could climb to 24,152 before entering overbought territory (RSI > 70).
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