Dax Index News: Forecast Wavers as US-EU Trade Talks Weigh on Market Sentiment

DAX Falters on Renewed Tariff Fears—Eyes on EU Deal Breakthrough

US-EU trade deal jitters weighed on risk sentiment as President Trump signaled more tariff hikes. The DAX fell 0.38% on Thursday, July 10, partially reversing Wednesday’s 1.42% gain to close at 24,550.

Earlier optimism over a potential US-EU trade agreement soured as negotiations continued. European Commission President Ursula von der Leyen gave a status update, reportedly stating that the EU was working non-stop to reach a favorable trade deal. One stumbling block could be a push for terms to protect the auto sector.

Meanwhile, EU Trade Chief Maros Sefcovic reportedly told EU lawmakers that a trade agreement could be reached in the coming days but provided no details.

Trade jitters overshadowed the inflation data from Germany. The annual inflation rate cooled from 2.1% in May to 2% in June. While softer inflation could support a more dovish ECB rate stance, trade developments remain crucial for the central bank’s policy stance.

Sector Snapshot: Auto Stocks Shine

BMW triggered a rally across the auto sector after signaling a strong third quarter, offsetting broader tariff concerns.

BMW topped the DAX, rallying 4.15%, with Porsche (+2%), Mercedes-Benz Group (+1.63%), and Volkswagen (+1.49%) posting gains.

However, bank stocks came under pressure, with Commerzbank and Deutsche Bank posting losses of 3.96% and 0.41%, respectively.

Wall Street Advances on Easing Recession Risks

US markets posted gains on July 10 as investors reacted to labor market data and earnings reports. The Dow and the S&P 500 climbed 0.43% and 0.27%, respectively, while the Nasdaq Composite Index rose 0.09%.

US initial jobless claims fell to 227k (week ending July 5), down from 232k (week ending June 28). The unexpected drop in claims signaled a resilient labor market, easing US recession risk.

Additionally, Delta Airlines released a robust quarterly and full-year profit outlook, boosting sentiment. Economists consider airline earnings a barometer of the US economy.

Notably, the chances of a US recession have dropped from 66% in May to 20% on July 11, while investors remain hopeful of further Fed policy easing. According to the CME FedWatch Tool, the probability of a September Fed rate cut stands at 67.6%, down marginally from 70% on July 9.

Fed Guidance and Trade Headlines in Focus

Later in the July 11 session, investors should track Fed chatter. Insights into the labor market, tariffs, and monetary policy could influence risk assets. Rising support for rate cuts on a softer inflation outlook may boost demand for risk assets such as the DAX. Conversely, calls to delay further policy easing could weigh on sentiment.

While Fed commentary will influence market trends, trade developments remain the key driver.

Outlook: Key Catalysts for the DAX

The DAX’s near-term outlook depends on US-EU trade developments and central bank guidance.

• Bullish Case: Progress toward a US-EU trade deal and dovish central bank signals may drive the DAX toward the record high of 24,639.
• Bearish Case: Rising US-EU trade tensions or hawkish central bank cues may drag the DAX toward 24,000.

At the time of writing on July 11, the DAX futures fell 73 points, while the Nasdaq 100 was down 48 points. Futures markets signaled a choppy start to the Friday session as investors await updates from EU trade negotiators.

DAX Technicals

Despite Thursday’s pullback, the DAX remains above the 50-day and 200-day Exponential Moving Averages (EMA), indicating a bullish bias.

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

The 14-day Relative Strength Index (RSI), at 62.30, suggests the DAX could climb to 24,639 before entering overbought territory (RSI > 70).

DAX Outlook: US-EU Trade Talks and Central Bank Commentary

Traders should closely track US-EU trade developments and central bank commentary. The threat of Liberation Day tariffs would likely impact the DAX. Conversely, a trade agreement could drive 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.