Dax Index News: Forecast Brightens on US-EU Trade Progress, ECB in Spotlight Today

DAX Soars as US and EU Near Trade Deal

Reports of the US and EU inching towards a crucial trade deal fueled risk appetite. The DAX jumped 1.12% to 24,513 in early trading on Thursday, July 24.

On Wednesday, July 23, President Trump hinted at a potential deal, amid reports of a 15% US tariff on the EU. Trump previously pushed for tariffs between 15-30%. The agreement would align with the US-Japan trade deal but with potential tariff exemptions on aircraft, alcohol, and medical supplies.

Trump highlighted his key tariff strategy, stating:

“I will always give up Tariff points if I can get major countries to OPEN THEIR MARKETS TO THE USA. Another great power of Tariffs. Without them, it would be impossible to get countries to OPEN UP!!! ALWAYS, ZERO TARIFFS TO AMERICA!!!”

Trade developments will likely limit the influence of private sector PMI numbers on risk assets. Lower US tariffs may boost demand for German goods, supporting the broader private sector.

Sector Performance: Bank and Authos Stocks Shine

Auto stocks led the gains on hopes for lower US tariffs. Daimler Truck Holding soared 7.32%, while Porsche rallied 1.7%. BMW, Mercedes-Benz Group, and Volkswagen also posted strong gains in early trading.

Meanwhile, Deutsche Bank jumped 3.67% after earnings results topped estimates. Commerzbank rose 0.70%.

ECB in Focus: Will the ECB Signal a Rate Cut?

While trade developments will be crucial, the ECB’s interest rate decision and press conference will also influence market sentiment. Economists expect the ECB to leave interest rates steady at 2.15%, placing the focus on President Lagarde’s press conference.

Reaction to the potential trade deal and insights into the timing for a rate cut will be crucial. Support for a Q3 ECB rate cut may lift sentiment. On the other hand, a cautious stance on policy, allowing policymakers to assess the effect of tariffs, may test demand for risk assets such as the DAX.

Wall Street Rallies as Trade Deals Flow

US markets posted gains on Wednesday, July 23, as investors reacted to the US-Japan trade deal and broader tariff developments. The Dow climbed 1.14%, while the Nasdaq Composite Index and the S&P 500 rose 0.61% and 0.78%, respectively.

Alphabet (GOOGL) beat estimates, while Tesla (TSLA) missed, producing a mixed reaction overall after the closing bell. Alphabet rose 1.72% in after-hours trading, while Tesla slid 4.44%.

US Economy in the Spotlight

Later in the Thursday session, US private sector and labor market data will require consideration.

Economists expect initial jobless claims to rise from 221k (week ending July 12) to 227k (week ending July 19). A lower print would signal a resilient labor market, easing recession fears. Conversely, a spike in claims could revive concerns about the US economy, potentially weighing on risk appetite.

Economists forecast the S&P Global Services PMI to rise from 52.9 in June to 53.0 in July. Given that the services sector accounts for around 80% of the US GDP, a pickup in activity would likely boost sentiment. However, investors should consider sub-components, including prices and employment. Rising prices and higher employment may temper Fed rate cut bets, testing demand for DAX-listed stocks.

Near-Term Outlook

The DAX’s near-term outlook depends on US-EU trade talks and central bank policy signals.

• Bearish Scenario: Rising US-EU trade tensions, weaker US data, or hawkish central bank guidance. Under these scenarios, the DAX may break toward 24,000.
• Bullish Scenario: A US-EU trade deal, strong US data, and dovish central bank rhetoric could drive the DAX toward the July record high of 24,639.

DAX Technical Indicators

Daily Chart

After the early breakout, the DAX trades well above the 50-day and 200-day Exponential Moving Averages (EMA). The EMAs signal bullish momentum.

A breakout above the record high of 24,639 could pave the way toward the 24,750 level. A sustained move through 24,750 would bring 25,000 into sight.

On the downside, a break below 24,500 could expose the crucial 24,000 support level. Increased selling pressure may allow a move toward the 50-day EMA.

The 14-day Relative Strength Index (RSI), at 59.8, indicates the DAX could climb to 24,639 before entering overbought territory (RSI > 70).

Final Thoughts

Overall, the DAX remains at a crucial juncture, with US-EU trade developments and the ECB press conference likely to determine the next directional move.

Traders should monitor both technical and fundamental drivers and consult our economic calendar.