DAX Index News: Forecast Turns Bearish as US-EU Trade Tensions Intensify

DAX Index Extends Losses as Trump Escalates Trade Tensions

Trade tensions dragged on sentiment as markets awaited Trump’s EU tariff announcement. The DAX Index dropped 0.82% on Friday, July 11, following Thursday’s 0.38% loss, closing at 24,255.

Optimism over a US-EU trade deal faded, with the threat of higher US tariffs on EU goods impacting DAX-listed stocks. A 30% US tariff on Canada and threats of 15% to 20% sweeping US levies on trading partners signaled a potentially higher tariff on the EU.

Sector Snapshot: Bank, Healthcare, and Tech Stocks Slide

Tariff uncertainties weighed on the healthcare and tech sectors, with pharmaceuticals and semiconductors as focal points for the US administration. Siemens Healthineers led the losses, tumbling 3.7%. Infineon Technologies ended the session down 0.72%.

Commerzbank and Deutsche Bank posted losses of 2.04% and 1.32%, respectively, as economic uncertainty weighed on the banking sector.

Wall Street Retreats on EU and Mexico Tariff News

US markets posted losses on July 11, reversing gains from Thursday. Reports of 30% tariffs on the EU and Mexico weighed on risk assets. The Dow declined 0.63%, while the Nasdaq Composite Index and the S&P 500 fell 0.22% and 0.33%, respectively.

President Trump issued a letter to the EU, raising tariffs on EU goods to 30%, effective August 1. European Commission President Ursula von der Leyen reacted to the letter, stating:

“A 30% tariff on EU exports would hurt businesses, consumers, and patients on both sides of the Atlantic. We will continue working towards an agreement by August 1. At the same time, we are ready to safeguard EU interests on the basis of proportionate countermeasures.”

Higher tariffs could drive inflationary pressures, potentially delaying Fed rate cuts. Chicago Fed President Austan Goolsbee remarked on the effect of Trump’s trade policies on the Fed, reportedly stating:

“I’ve got to wait until that noise kind of dies down, that anxiety dies down before I’m gonna be comfortable that we are back on the old golden path, as I called it, to a stable soft landing. If we, every six weeks, have to revisit whether we’re about to have some big supply shock, that’s messy at the least.”

Fed Commentary and Trade Developments in Focus

Later in the July 14 session, investors should closely monitor Fed commentary and trade headlines. Fed insights into the labor market, tariffs, and monetary policy are likely to influence risk assets. Increased support for rate cuts may boost demand for risk-sensitive assets, including DAX-listed stocks. Conversely, hawkish rhetoric in response to Friday’s tariff news could dampen sentiment.

Outlook: Key Catalysts for the DAX Index

The DAX Index’s near-term outlook hinges on US-EU trade headlines and central bank guidance.

• Bullish Case: A US-EU trade deal and dovish central bank cues could send the DAX toward the record high of 24,639.
• Bearish Case: Stalled US-EU trade talks or hawkish central bank rhetoric may push the DAX toward 24,000.

At the time of writing on July 14, the DAX futures slid 150 points, while the Nasdaq 100 was down 87 points. Futures markets signaled a choppy start to the week as investors consider the latest tariff news.

DAX Index Technicals

Despite Friday’s losses, the DAX continues to trade above the 50-day and 200-day Exponential Moving Averages (EMA), signaling bullish momentum.

• Upside Target: A breakout above the July 10 record high of 24,639 could enable the bulls to target 24,750. A sustained move through 24,750 may pave the way to 25,000.
• Downside risk: A break below 24,250 may bring the 24,000 mark into play, potentially exposing the 50-day EMA.

The 14-day Relative Strength Index (RSI), at 57.62, indicates the DAX may climb to 24,639 before entering overbought territory (RSI > 70).

DAX Index Outlook: US-EU Trade News and Central Bank Commentary

Traders should closely monitor US-EU trade headlines and central bank commentary. Failed talks and rising tensions would likely impact the DAX. Conversely, a trade deal could send the DAX to record highs. Trade developments will have greater weight than central bank guidance.

Explore our exclusive forecasts to assess whether improving trade sentiment could lift the DAX to new highs. Refer to our latest forecasts and macro insights here for further analysis, and consult our economic calendar.