DAX Index Today: German Inflation and ECB Rate Cut Speculation

The Overview of the DAX Performance

The DAX rallied 1.36% on Friday (April 26). Reversing a 0.95% slide from Thursday (April 25), the DAX closed the session at 18,161.

There were no stats for Germany and the Eurozone for investors to consider. However, an ECB report supported bets on a June ECB rate cut. The ECB Consumer Expectations survey revealed lower inflation and income expectations, signaling downward trends in consumer spending.

Moreover, corporate earnings results contributed to the gains as investors reacted to overnight earnings results from Alphabet (GOOGL) and Microsoft (MSFT).

US Personal Income and Expenditures Report

On Friday (April 26), the US Personal Income and Expenditures Report drew investor interest. The US Core PCE Price Index advanced by 2.8% year-on-year in March after rising by 2.8% in February. Moreover, personal income and spending increased by 0.5% and 0.8% in March. Better-than-expected numbers tempered investor expectations of a September Fed rate cut.

Nevertheless, the stats failed to impact market risk sentiment as the US equity market responded to the Alphabet and Microsoft earnings releases.

On Friday, the Dow gained 0.40%. The Nasdaq Composite Index and the S&P 500 ended the session up 2.03% and 1.02%, respectively.

The Friday Market Movers

Siemens Energy AG led the way, rallying 5.33%, with Infineon Technologies and SAP gaining 1.44% and 2.23%, respectively.

Auto stocks reversed losses from Thursday. Mercedes Benz Group advanced by 1.56%, with BMW gaining 1.29%. Volkswagen and Porsche rose by 1.09% and 0.84%, respectively.

However, it was a mixed session for the banking sector. Deutsche Bank fell by 0.77%, while Commerzbank increased by 0.36%.

German Inflation and the ECB

On Monday (April 29), preliminary inflation numbers for Germany will warrant investor attention. Economists forecast the annual inflation rate to rise from 2.2% to 2.3% in April.

Softer-than-expected figures could raise investor expectations of multiple 2024 ECB rate cuts.

Other stats include economic sentiment numbers for the Eurozone. An uptrend in economic sentiment would align with expectations of an improving macroeconomic environment.

Economists forecast the Economic Sentiment Index to increase from 96.3 to 96.9 in April.

Beyond the numbers, investors should monitor ECB commentary. ECB Vice President Luis de Guindos is on the calendar to speak. Views on the economic outlook, inflation, and the ECB rate path could move the dial.

The Dallas Fed Manufacturing Index and US Corporate Earnings

Later in the session, the Dallas Fed Manufacturing Index will draw investor interest. Higher-than-expected figures would support investor expectations of the US avoiding a recession.

Economists forecast the Index to increase from -14.4 to -11.0 in April.

However, corporate earnings could also influence market risk sentiment. MicroStrategy (MSTR) is among the big names to release earnings results. Upbeat earnings results could also fuel buyer demand for bitcoin (BTC).

Near-Term Outlook

Near-term trends for the DAX will hinge on German inflation numbers and ECB chatter. Softer-than-expected inflation could further fuel investor bets on a June ECB rate cut. Moreover, ECB commentary and corporate earnings also need consideration before Q1 GDP numbers on Tuesday (April 30).

On the Futures markets, the DAX and the Nasdaq mini were up by 56 and 60 points, respectively.

DAX Technical Indicators

Daily Chart

The DAX remained comfortably above the 50-day and 200-day EMAs, affirming the bullish price signals.

A DAX break above the Friday (April 26) high of 18,200 could support a move to the 18,350 handle.

German inflation numbers, ECB commentary, and corporate earnings need consideration.

However, a DAX drop below the 18,000 handle would give the bears a run at the 50-day EMA. A fall through the 50-day EMA could signal a drop toward the 17,615 support level.

The 14-day RSI at 50.95 indicates a DAX move to the April 2 all-time high of 18,567 before entering overbought territory.

4-Hourly Chart

The DAX sat above the 50-day and 200-day EMAs, confirming the bullish price trends.

A DAX breakout from the 18,200 handle could give the bulls a run at 18,350.

Conversely, a break below the 50-day EMA would bring the 17,800 handle into play.

The 14-period 4-hour RSI at 59.65 suggests a DAX return to the 18,350 handle before entering overbought territory.