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US Markets Recap
On Monday, February 10, US equity markets recovered from Friday’s pullback, with investors ignoring US tariff threats. The Nasdaq Composite Index gained 0.98%, while the Dow and S&P 500 advanced by 0.38% and 0.67%, respectively.
US metal producers led the gains, with Century Aluminum (CENX) surging by 10.22% while US Steel (X) rose 4.65%. AI stocks also trended higher, with Nvidia (NVDA) ending the session up 2.87%.
With a light economic calendar, US foreign policy and economic sentiment toward the US economy influenced market trends.
Will the Fed Chair Powell Spook Investors?
On February 11, Fed Chair Powell will deliver his semi-annual testimony on Capitol Hill. Markets will be looking for:
- Insights into inflation trends and the Fed’s rate path.
- Comments on labor market conditions and consumer spending.
- Possible concerns over tariff-driven inflation pressures.
A hawkish policy stance, driven by concerns over tariff-induced inflation, could weigh on risk assets. Tariffs may push import prices higher, fueling inflationary pressures. A more hawkish Fed could lead to higher borrowing costs, potentially affecting corporate earnings. Meanwhile, softer inflation rhetoric may support risk assets like the DAX.
Near-Term Outlook
The DAX’s outlook hinges on Fed Chair Powell’s testimony and upcoming inflation data.
- Softer inflation and a dovish Fed Chair may fuel risk asset demand, potentially pushing the DAX above 22,000.
- Hotter-than-expected inflation numbers and a hawkish Fed Chair may pull the DAX toward 21,500.
While Powell’s testimony and inflation data are key near-term drivers, trade tensions could fuel additional volatility. An escalation in US-EU trade tensions could drag the DAX lower, while a de-escalation may boost demand for risk assets.
As of Tuesday morning, US futures pointed to a testy session, with the Nasdaq 100 mini falling 90 points.
DAX Technical Indicators
Daily Chart
After Monday’s record high of 21,946, the DAX sits well above the 50-day and 200-day Exponential Moving Averages (EMAs), sending bullish price signals.
If the DAX surpasses Monday’s record high of 21,946, it could break out above the 22,000 threshold. A breakout from 22,000 may signal a move toward 22,350.
Conversely, a DAX drop to 21,750 may enable the bears to target 21,500 next. A fall through 21,500 could bring 21,000 into sight.
With the 14-day Relative Strength Index (RSI) at 71.31, the DAX remains in overbought territory (RSI higher than 70). Selling pressure may intensify if the DAX approaches the key resistance level of 21,946.
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