DAX Index News: Forecast Turns Bullish as Optimism Over US-EU Trade Deal Grows

DAX Snaps Five-Day Losing Streak

Optimism over a US-EU trade deal and easing fears of a tariff-triggered US recession boosted risk sentiment. Snapping a five-day losing streak, the DAX rallied 1.51% on Thursday, July 17. Reversing a 0.21% loss from Wednesday, the DAX closed at 24,371. Despite the rebound, the DAX fell short of its July record high of 24,639.

Reports of a 20-year deal between Italian firm ENI and US gas producer Venture Global raised hopes for Brussels and Washington inking a trade agreement. ENI agreed to buy 2 million metric tons of liquefied natural gas per year. LNG imports could eat into the US trade deficit with the EU. This would meet President Trump’s call for the EU to buy US oil and gas to shrink the trade imbalance.

Sector Snapshot: Autos and Tech Stocks Shine

Market hopes for the EU avoiding a 30% US tariff, effective August 1, boosted demand for export-focused stocks. Airbus and MTU Aero rallied 2.21% and 2.4%, respectively.

In addition, auto and tech stocks contributed to the DAX’s gains. Infineon Technologies climbed 1.98%, while Mercedes-Benz Group led the auto sector, rising 0.62%.

German Producer Prices to Spotlight the ECB

On Friday, July 18, German producer prices could influence sentiment toward the ECB rate path. Economists expect producer prices to fall 1.3% year-on-year in June after May’s 1.2% decline.

As a leading inflation indicator, a sharper fall in producer prices would signal a softer inflation outlook, supporting a more dovish ECB stance. Rising bets on an ECB rate cut could lift the DAX. On the other hand, better-than-expected numbers may weigh on sentiment.

Wall Street Gets Boost from US Economic and Earnings Calendars

US markets posted gains on Thursday, July 17, as investors reacted to upbeat US economic data and corporate earnings. The Dow and the S&P 500 rose 0.52% and 0.54%, respectively, while the Nasdaq Composite Index climbed 0.75%.

US retail sales increased 0.6% month-on-month in June, rebounding from May’s 0.9% fall. Given that private consumption accounts for over 60% of US GDP, June’s data eased fears of a US economic recession. Labor market data also lifted sentiment. Initial jobless claims dipped from 228k (week ending July 5) to 221k (week ending July 12). A resilient labor market may boost consumer confidence and spending.

Meanwhile, Nasdaq-listed PepsiCo posted strong earnings, rallying 7.45%.

US Consumer Confidence, Fed Speakers, and Trade Talks in Focus

Later in the July 18 session, the Michigan Consumer Confidence Index may affect the Fed rate path. Economists forecast the Consumer Confidence Index to rise from 60.7 in June to 61.5 in July.

A pickup in consumer sentiment may fuel spending, bolstering the US economy and driving demand for risk assets such as the DAX. Conversely, a drop in confidence could weigh on DAX-listed stocks.

Beyond the data, investors should closely monitor Fed speakers’ remarks on inflation, US tariffs, and monetary policy. However, despite market sensitivity to economic indicators, trade talks will remain the key driver.

Outlook: Key Catalysts for the DAX

The DAX’s near-term trajectory hinges on US-EU trade talks, US consumer confidence, and central bank guidance.

• Bullish Case: A US-EU trade deal, rising US consumer confidence, and dovish central bank rhetoric. These factors could send the DAX toward the record high of 24,639.
• Bearish Case: Failed US-EU trade talks, weaker US consumer confidence, or hawkish central bank signals may pull the DAX toward 24,000.

At the time of writing on July 18, the DAX futures rose 92 points, while the Nasdaq 100 was up 25 points. Futures markets signaled a positive start to the Friday session as investors track US-EU trade developments.

DAX Technicals

After Thursday’s rebound, the DAX trades well 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 drop below 24,000 could bring the 50-day EMA and potentially the 23,500 level into play.

The 14-day Relative Strength Index (RSI), at 58.88, indicates the DAX may climb to 24,639 before entering overbought territory (RSI > 70).

DAX Outlook: US-EU Trade Developments, US Data, and Central Bank Rhetoric

Traders should closely monitor trade talks in Washington, US economic data, and central bank guidance. Stalled talks and retaliatory threats would likely weigh on the DAX. Conversely, a trade deal could send the DAX to record highs. Trade developments will have greater weight than central bank guidance and upcoming economic indicators.

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.