DAX Index Today: 18,250 Hinged on ECB and Fed Speakers

Overview of the DAX Performance on Thursday

The DAX rallied 0.91% on Thursday. Following a 0.15% gain on Wednesday, the DAX ended the Thursday session at 18,179. Significantly, the DAX climbed to an all-time high of 18,180.

Euro Area Services PMIs and the Swiss National Bank

On Thursday, German and Eurozone Services PMIs signaled an improving macroeconomic backdrop. The German Services PMI increased from 48.3 to 49.8, with the Eurozone Services PMI up from 50.2 to 51.1. Significantly, input and selling price inflation eased in March, supporting bets on a June ECB rate cut.

Manufacturing sector woes failed to spook investors. The German Manufacturing PMI fell from 42.5 to 41.6.

Beyond the euro area economic calendar, the Swiss National Bank (SNB) drove demand for riskier assets. The SNB surprised the markets, cutting interest rates by 25 basis points. The rate cut raised expectations of other central banks following in the footsteps of the SNB on softer inflationary pressures.

US Economic Calendar Supports Expectations of a Soft Landing

On Thursday, US economic data supported bets on an H1 2024 Fed rate cut and a US soft landing.

Jobless claims and manufacturing sector data beat expectations, while service sector activity slowed moderately.

Initial Jobless Claims fell from 212k to 210k in the week ending March 16. Economists forecast an increase to 215k. The Philly Fed Manufacturing Index slipped from 5.2 to 3.2. Economists expected the Index to fall to -2.3.

The S&P Global Services PMI fell modestly from 52.3 to 51.7 in March. Economists predicted a PMI of 52.0. In contrast, the S&P Global Manufacturing PMI increased from 52.2 to 52.5.

The US equity markets extended gains from Wednesday. On Thursday, the Dow and S&P 500 ended the day up 0.68% and 0.32%, respectively. The Nasdaq Composite gained 0.20%.

The Thursday Market Movers

Tech stocks led the way, with Siemens Energy AG and SAP seeing gains of 6.54% and 4.05%, respectively. Infineon Technologies advanced by 2.87%.

Bank stocks benefited from the improving economic outlook. Deutsche Bank and Commerzbank ended the session up 2.57% and 1.18%, respectively.

However, auto stocks had a mixed session on weaker manufacturing output.

BMW and Mercedes Benz Group saw losses of 1.47% and 0.62%, respectively. Porsche declined by 0.47%. Volkswagen bucked the trend, gaining 0.20%.

German Business Sentiment and the ECB in the Spotlight

On Friday, German business sentiment figures for March warrant investor attention. Economists forecast the Ifo Business Climate Index to increase from 85.5 to 86.0. Better-than-expected numbers could support buyer demand for DAX-listed stocks. However, investors must consider the sub-components, including the Business Expectations Index.

Beyond the numbers, the ECB will also be in focus. The ECB General Council meeting and ECB chatter need investor consideration. ECB President Christine Lagarde and Chief Economist Philip Lane are on the calendar to speak. Support for a June ECB rate cut could influence buyer appetite for rate-sensitive DAX-listed stocks.

US Economic Calendar: Fed Chair Powell and FOMC Members in Focus

Later in the session, Fed Chair Powell will be in the spotlight again. The Fed Chair will give opening remarks at the Fed Listens event. Investors should monitor for deviation from forward guidance during the FOMC press conference.

FOMC members Michelle Bowman and Philip Jefferson will moderate at the event. Views on inflation and the timeline for a Fed rate cut could move the dial.

FOMC member Michael Barr is also on the calendar to speak.

FOMC members Barr, Bowman, and Jefferson are voting members of the FOMC.

Short-term Forecast

Near-term trends for the DAX will hinge on central bank chatter and German business sentiment numbers. An improving macroeconomic backdrop in Germany and ECB support for a June rate cut could drive the DAX to 18,250.

In the futures, the DAX was down 12 points, while the Nasdaq mini was up by 14 points.

DAX Technical Indicators

Daily Chart

The DAX remained well above the 50-day and 200-day EMAs, affirming the bullish price signals.

A DAX break above the March 21 all-time high of 18,180 would give the bulls a run at 18,250.

German business sentiment and central bank commentary warrant investor attention.

Conversely, a drop below the 18,100 handle could signal a DAX retreat below the 17,950 handle.

The 14-day RSI at 81.20 shows the DAX in overbought territory. Selling pressure could intensify at the March 21 high of 18,180.

4-Hourly Chart

The DAX sat above its 50-day and 200-day EMAs, confirming the bullish price trends.

A DAX break above the March 21 all-time high of 18,180 would support a move toward the 18,250 handle.

However, a break below the 18,100 handle could give the bears a run at the 50-day EMA.

The 14-period 4-hour RSI at 72.41 shows the DAX in overbought territory. Selling pressure could intensify at the all-time high of 18,180.