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Will Tariffs Derail the DAX Rally?
On Wednesday, April 9, investors will likely react to the overnight rollout of sweeping US tariffs, including a 20% levy on EU imports. Asian markets tumbled ahead of the European opening bell, reflecting concerns over recession risks and rising demand for safe-haven assets.
Trade-related headlines and central bank forward guidance are likely to be pivotal for sentiment.
- Bullish Scenario: Positive trade-related developments and central bank support for rate cuts to bolster demand for German stocks.
- Bearish Scenario: An escalation in tariff measures or central bank calls to delay rate cuts may drag the DAX lower.
Near-Term Outlook: Key Drivers
The DAX remains sensitive to developments in trade policy, inflation trends, and central bank guidance.
Potential DAX Scenarios:
- Bullish Case: Easing trade tensions, softer inflation, or dovish central bank rhetoric could push the DAX toward 21,000.
- Bearish Case: Trade negotiations, rising inflation, or hawkish central bank commentary may push the DAX toward the April 7 low of 18,490.
As of Wednesday morning, the DAX futures were down 856 points, while the Nasdaq 100 mini fell 358 points, signaling negative sentiment after the US tariff announcement.
The Kobeissi Letter reported:
“President Trump’s reciprocal tariffs have officially gone LIVE with US tariffs now in effect on 185+ countries. The US is now collecting a massive 104% tariff on Chinese goods.”
Technical Warning Signs Flash
Daily Chart:
Despite Tuesday’s bounce, the DAX trades below the 50-day and 200-day Exponential Moving Averages (EMA), indicating elevated downside risks.
- Upside Target: A break above the 200-day EMA could pave the way to 21,000. A sustained move above 21,000 may enable the bulls to target 21,500.
- Downside risk: A drop below 20,000 may open the door to a fall below the 19,675 support level. If the DAX drops below 19,675, 18,827 would be the next key support level.
With the RSI at 31.53, the DAX could drop below 20,000 before entering oversold territory (RSI below 30).
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