Dax Index News: Forecast Signals Gains as ECB Bets Offset Trade War Uncertainties

DAX Gains Ground as ECB Bets Trump Trade Tensions

The DAX opened higher on Tuesday, May 20, as ECB rate cut expectations helped offset concerns over renewed US-China tensions. On Tuesday, May 20, the DAX rose 0.27% to 23,999, briefly climbing to a record high of 24,006 in early trading.

Ahead of the European opening bell, producer prices from Germany supported a more dovish ECB rate path. Producer prices fell 0.9% year-on-year in April after declining 0.2% in March. As a leading inflation indicator, falling producer prices could signal softer underlying inflationary pressures.

Sector Performance

Siemens Energy and RWE AG ST led the gains, rising 1.60 and 1.20%, respectively.

Meanwhile, auto stocks capped the early gains as trade uncertainties lingered. Mercedes-Benz Group fell 0.88%, with BMW, Porsche, and Volkswagen also posting losses.

Eurozone Consumer Sentiment in Focus

Later in the session, Eurozone consumer sentiment will require consideration. Economists expect the Consumer Sentiment Index to rise modestly from -16.7 in April to -16 in May. A higher reading could signal a pickup in consumer spending, bolstering the Eurozone economy. However, a softer print may strengthen the case for further ECB rate cuts.

US Markets Climb on Economic Optimism

Wall Street kicked off the week in positive territory amid positive sentiment toward the US economy. The Nasdaq Composite Index edged 0.02% higher on Monday, May 19, while the Dow and S&P 500 gained 0.32% and 0.09%, respectively.

Investors shrugged off Moody’s downgrade of the US sovereign credit rating from Aaa to Aa1. Recent economic indicators, including upbeat labor market data, softer inflation, and resilient consumer spending, have lifted risk sentiment.

Fed Commentary in Focus

Fed speakers, including Bostic, Barkin, and Collins, will speak later today. Their remarks on recent economic data and trade developments require consideration. Calls to delay rate cuts to gauge tariff effects could weigh on DAX-listed stocks. On the other hand, support for rate cuts could send the DAX to fresh record highs.

Near-Term Outlook

The DAX’s near-term trajectory hinges on upcoming Services PMI data, trade developments, and central bank cues.

• Bearish Scenario: Rising US-EU tensions, weak economic data, and hawkish central bank signals could send the DAX toward 23,500.
• Bullish Scenario: Optimism about a US-EU trade deal, upbeat PMI data, and dovish Fed central bank signals may drive the DAX toward 24,500.

DAX Technical Indicators

Daily Chart

The DAX continues to trade above the 50-day and 200-day Exponential Moving Averages (EMA), maintaining a bullish trend.

A breakout above 24,000 would open the door to testing resistance at 24,150. A sustained move above 24,150 could signal a move toward 24,350.

On the downside, a drop below 23,750 would expose support at 23,500, with 23,000 the next support level.

The 14-day Relative Strength Index (RSI) at 70.63 indicates overbought conditions (RSI > 70). Selling pressure could intensify at the morning high of 24,006.

Final Thoughts

As global trade dynamics, central bank guidance, and economic indicators continue influencing sentiment, volatility is likely to persist. EU trade policy and fiscal signals from Germany may also play a key role in influencing demand for German equities. Traders should remain alert to both technical and fundamental shifts.