DAX Index News Today: ECB Expectations, Fed Commentary, and Middle East Tensions

The Overview of the DAX Performance

The DAX slid by 1.44% on Tuesday. Reversing a 0.54% gain from Monday, the DAX ended the session at 17,766.

Euro Area Economic Indicators Send Mixed Signals

German wholesale prices declined by 3.0% year-on-year in March after falling 3.0% in February. Wholesale price trends continued to signal a weak demand environment at the end of the first quarter.

However, sentiment toward the German economy improved in April. The German ZEW Economic Sentiment Index jumped from 31.7 to 42.9, aligning with ECB expectations of a pickup in economic activity.

Trade data for the Eurozone was also market-friendly. The trade surplus widened from €11.6 billion to €23.6 billion in February.

However, the impact of better-than-expected US retail sales figures from Monday resonated. Falling investor bets on a 2024 Fed rate cut overshadowed improving sentiment toward the German economy. Concerns about the Middle East contributed to the Tuesday losses.

US Economic Calendar: Fed Chair Powell Signals a Less Dovish Rate Path

On Tuesday, Fed Chair Powell warned the Fed may need to delay cutting interest rates. Powell said the Fed could keep rates higher for longer to gain confidence inflation was returning to the target.

10-year US Treasury yields rose 1.37% to close the session at 4.669%.

On Monday, the Nasdaq Composite Index and the S&P 500 saw losses of 0.12% and 0.21%, respectively. The Dow gained 0.17%.

US housing sector data took a back seat despite weaker-than-expected stats. Housing starts slid by 14.7% in March, with building permits declining by 4.3%. US industrial production advanced by 0.4% after increasing by 0.4% in February.

The Tuesday Market Movers

Auto stocks were among the worst-performing stocks. BMW and Volkswagen slid by 2.96% and 2.15%, respectively. Mercedes Benz Group and Porsche saw losses of 2.14% and 1.98%, respectively.

Tech stocks also ended the day in negative territory. Infineon Technologies and SAP declined by 0.79% and 0.75%, respectively.

News of HSBC plans to cut investment banking jobs pressured banking stocks. Deutsche Bank and Commerzbank fell by 1.85% and 0.78%, respectively.

Eurozone Inflation in Focus

On Wednesday, inflation figures for the Eurozone could further cement expectations of a June ECB rate cut. According to preliminary numbers, the annual inflation rate softened from 2.6% to 2.4%.

Downward revisions could drive buyer demand for DAX-listed stocks.

US Economic Calendar: Fed Commentary and the Middle East

Investors should monitor FOMC member commentary throughout the Wednesday session. FOMC member support to delay Fed interest rate cuts could affect buyer demand for riskier assets.

Warnings of a possible Fed rate hike could spook investors.

Beyond the economic calendar, investors should monitor news updates from the Middle East. Israeli plans to retaliate against the Saturday attack would fuel an investor flight to safety.

There are no stats from the US to consider, while corporate earnings results could move the dial.

Near-Term Outlook

Near-term trends for the DAX will likely hinge on investor expectations of ECB and Fed rate cuts. However, news updates from the Middle East and corporate earnings will influence buyer appetite for DAX-listed stocks.

In futures trading, the DAX and the Nasdaq Mini advanced by 43 and 49 points, respectively. Hopes of fresh sanctions on Iran averting an Israeli strike are likely to have contributed to the gains.

DAX Technical Indicators

Daily Chart

The DAX held above the 50-day and 200-day EMAs, sending bullish price signals.

A DAX return to the 18,000 handle would support a move toward the 18,350 handle. A break above the 18,350 handle could give the bulls a look at the April 2 all-time high of 18,567.

The Fed chatter, corporate earnings, and updates from the Middle East need investor consideration.

However, a break below the 50-day EMA would bring the 17,615 support level and the 17,500 handle into play.

The 14-day RSI at 41.51 indicates a DAX drop below the 17,500 handle before entering oversold territory.

4-Hourly Chart

The DAX remained below the 50-day EMA while hovering above the 200-day EMA, affirming the bearish near-term but bullish longer-term price signals.

A move to the 18,000 handle would give the bulls a run at the 50-day EMA. A breakout from the 50-day EMA would bring the 18,500 handle into view.

Conversely, a drop below the 17,750 handle could give the bears a run at the 17,615 support level.

The 14-period 4-hour RSI at 36.92 suggests a DAX drop below the 17,615 support level before entering oversold territory.