DAX Ends the Week Lower as Trade Tensions Cloud Market Optimism
Hopes for a US-EU trade breakthrough gave way to caution on Friday, July 18. The DAX slipped 0.33% on Friday, July 18, paring back Thursday’s 1.51% surge to end the week marginally higher at 24,290.
Trade deal uncertainties overshadowed a sharper fall in German producer prices. Producer prices fell 1.3% year-on-year in June after declining 1.2% in May. As a leading inflation indicator, falling producer prices could signal a softer CPI outlook, supporting a more dovish ECB stance.
Sector Snapshot: Autos Stocks Hit the Reverse
Uncertainty about a US-EU trade deal weighed on the auto sector. Mercedes-Benz Group slid 1.12%, with BMW and Volkswagen falling 0.38% and 0.31%, respectively. Porsche ended the session down 0.29%.
The healthcare and tech sectors also came under selling pressure. Both sectors are potential targets for higher tariffs.
Wall Street Mixed as Trump Threatens Higher Tariffs on EU Goods
US markets had mixed performances on Friday, July 18, as market focus turned to trade headlines. The Dow and the S&P 500 fell 0.32% and 0.01%, respectively, while the Nasdaq Composite Index gained 0.05%.
A pickup in US consumer confidence and corporate earnings bolstered demand for US markets at current levels. The surge in crypto demand sent Robinhood (HOOD) and Coinbase (COIN) 4.07% and 2.2% higher. Bitcoin (BTC) struck an all-time high of $122,057 this week, while XRP is up 21.9% for the week, driving trading volumes on exchanges.
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See all DAX forecastsHowever, reports of President Trump pushing for 15% to 20% tariffs on EU goods tempered sentiment.
Fed Speakers and Trade Developments in Focus
On Monday, July 21, trade developments may influence demand for risk assets such as the DAX. An EU response to Trump’s threat of higher tariffs could trigger a market sell-off. Conversely, easing trade tensions may lift sentiment.
Following last week’s US economic indicators, Fed commentary could also move the dial. Views on tariffs, inflation, and timelines for Fed rate cuts will influence risk appetite. Support for rate cuts may lift the DAX, while calls to delay policy moves will likely pressure rate-sensitive stocks.
Outlook: Key Catalysts for the DAX
The DAX’s near-term trajectory hinges on US-EU trade talks and central bank guidance.
- Bullish Case: A US-EU trade deal and dovish central bank cues. These factors could send the DAX toward its 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 21, the DAX futures dropped 58 points, while the Nasdaq 100 was up 38 points. Futures markets reflected sentiment toward Trump’s EU tariff push.
DAX Technicals
Despite Friday’s loss, the DAX remains well above the 50-day and 200-day Exponential Moving Averages (EMA), indicating bullish momentum.
- Upside Target: A breakout above 24,500 could pave the way to the July 10 record high of 24,639. A sustained move above 24,639 may bring the 24,750 level into play.
- Downside risk: A drop below 24,000 could expose the 50-day EMA.
The 14-day Relative Strength Index (RSI), at 56.94, suggests the DAX may climb to 24,639 before entering overbought territory (RSI > 70).
DAX Outlook Summary: US-EU Trade Talks and Central Bank Commentary
Traders should monitor both EU-US trade talks and central bank commentary, with trade developments likely to carry more weight.
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.
