Dax Index News: Trade Talks and Fed Outlook Dictate DAX Forecast This Week

DAX Advances as ECB Rate Cut Bets Boost Demand

The DAX gained 0.67% on Tuesday, June 3, reversing Monday’s 0.28% loss to close at 24,092.

Hopes for a more dovish ECB rate path bolstered demand for DAX-listed stocks. The Eurozone’s annual inflation rate dropped from 2.2% in April to 1.9% in May, falling below the bank’s 2% target for the first time since September 2024, only the second time since June 2021.

However, trade uncertainty limited Tuesday’s gains as the US and EU will resume tariff negotiations on June 4. President Trump’s threat of lifting steel and aluminum tariffs to 50% triggered EU warnings of retaliatory measures ahead of trade talks.

Auto and Tech Stocks Lead Gains

Hopes for a US-EU trade agreement and more aggressive ECB rate cuts boosted demand for DAX-listed auto and tech stocks.

Infineon Technologies and SAP posted gains of 1.57% and 1.99%, respectively. BMW rose 1.86%, with Daimler Truck Holding, Mercedes-Benz Group, and Volkswagen also advancing.

US-EU Trade Talks Take Center Stage

On Wednesday, June 4, US-EU trade negotiations will be in the spotlight. US Trade Representative Jamieson Greer and European Commissioner for Trade Maros Sefcovic are due to meet following Trump’s tariff hike threat on steel and aluminum.

US-EU trade developments will be crucial for near-term demand for German-listed stocks. Failed talks would likely adversely impact risk sentiment, potentially sending the DAX sharply lower. On the other hand, progress toward a favorable deal for the EU could drive the DAX to new record highs.

Wall Street Advances Ahead of Crucial Labor Market Data

US markets advanced on June 3 as optimism toward trade deals drove demand for risk assets. The Nasdaq Composite Index rallied 0.81%, while the Dow and the S&P 500 climbed 0.51% and 0.58%, respectively.

Reports of Trump planning to call China’s President Xi Jinping eased concerns about the US-China trade flare-up over Beijing’s restrictions on rare earth mineral exports.

However, Fed policy uncertainty continued to shroud markets despite economic indicators flashing red. Fed’s Austan Goolsbee said tariffs could push import prices higher and drive inflation upwards as soon as next month.

While JOLTs job openings unexpectedly increased in April, factory orders aligned with Monday’s ISM Manufacturing PMI data, suggesting waning demand. Orders slid 3.7% month-on-month in April, reversing a 3.4% jump in March.

US Labor Market and Services Sector in Focus

On Wednesday, June 4, ADP employment data and the ISM Services PMI will be in focus. Economists expect the ADP report to show employment rising by 115k in May, up from 62k in April.

Tighter labor market conditions could support higher wages, fueling consumer spending and inflationary pressures.

Economists forecast the ISM Services PMI to rise from 51.6 in April to 52 in May. Accounting for around 80% of US GDP, a higher PMI print would likely ease recession jitters.

However, a higher inflation outlook and pickup in services sector activity may lower bets on a 2025 Fed rate cut, impacting risk assets. Conversely, softer labor market and PMI readings may revive expectations of a Q3 Fed move, potentially boosting demand for DAX-listed stocks.

Beyond the data, traders should monitor Fed reactions to Friday’s inflation report.

Outlook: What Could Drive the DAX Next?

The DAX’s near-term trajectory depends on US economic indicators, US-EU trade talks, and central bank commentary.

• Bullish Case: Progress toward a US-EU trade deal, easing US recession risks, and dovish central bank signals could push the DAX toward 24,500.
• Bearish Case: Failed US-EU trade talks, rising US recession risks, or hawkish central bank cues may send the DAX toward 23,750.

As of Wednesday morning, the DAX futures were down by 50 points, while the Nasdaq 100 mini dropped 29 points. These trends reflected sentiment toward central bank policy stances and trade developments.

Technical Setup Suggests Cautious Optimism

The DAX remains above the 50-day and the 200-day Exponential Moving Averages (EMA), signaling underlying bullish momentum.

• Upside Target: A break above the May 28 record high of 24,326 could support a move toward 24,500. A sustained move through 24,500 would enable the bulls to target 24,750.
• Downside risk: A break below 23,750 exposes the May 23 low of 23,275, with 23,000 the next key support level.

The 14-day Relative Strength Index (RSI), at 62.59, indicates the DAX has room to revisit 24,326 before entering overbought territory (RSI > 70).

Conclusion: Eyes on Data and Trade Headlines

Traders should closely track updates from US-EU trade talks, US economic data releases, and central bank policy signals for guidance.

Explore our exclusive forecasts to see whether trade optimism can send the DAX to new highs. Refer to our latest forecasts and macro insights here for further analysis, and consult our economic calendar.