DAX Index Today: Eurozone Data and ECB Chatter to Impact the DAX Outlook

Overview of the DAX Performance on Tuesday

The DAX rallied 1.23% on Tuesday. Reversing a 0.38% loss from Monday, the DAX ended the session at 17,965. Significantly, the DAX climbed to a new all-time high of 17,973.

German Inflation Softened in February

On Tuesday, finalized inflation numbers from Germany garnered investor interest. The German annual inflation rate fell from 2.9% to 2.5% in February. The inflation figures aligned with preliminary numbers, supporting bets on a June ECB rate cut.

ECB commentary also needed consideration. Francois Villeroy de Galhau supported a June rate cut. The Governor of the Bank of France cited the risks of waiting too long to cut interest rates, supporting DAX-listed stocks.

Investors Ignore the US CPI Report

On Tuesday, a hotter-than-expected US CPI Report failed to impact the appetite for riskier assets. The US annual inflation rate rose from 3.1% to 3.2%, while the core inflation rate eased from 3.9% to 3.8%. Economists forecast rates of 3.1% and 3.7%, respectively.

However, the US equity markets brushed aside the inflation numbers. Market bets on a June Fed rate cut fell modestly. Investors remained hopeful that inflationary pressures will continue to soften as labor market conditions weaken further.

10-year US Treasury yields reflected the influence of the inflation numbers on the Fed rate path. Yields rose by 1.29%, ending the Tuesday session at 4.153%. Despite the upswing in 10-year Treasury yields, the US equity markets wrapped up the session in positive territory.

On Tuesday, the Nasdaq Composite rallied 1.54%. The Dow and S&P 500 ended the session up 0.61% and 1.12%, respectively.

The Tuesday Market Movers

Auto stocks were among the front-runners on Tuesday. Porsche and Volkswagen rallied 4.25% and 3.12%, respectively. BMW and Daimler Truck Holding ended the session up 2.71% and 2.37%, respectively. Mercedes Benz Group gained 1.27%.

Tech stocks continued to rise, with Infineon Technologies and SAP seeing gains of 3.41% and 2.01%, respectively.

Eurozone Industrial Production and the ECB in Focus

On Wednesday, industrial production numbers for the Eurozone will garner investor interest. Economists forecast industrial production to decline by 2.6% in January after rising 2.6% in December.

Downward trends in consumer prices could see investors show more interest in the service and manufacturing sector data. A weakening macroeconomic environment could support bets on a more dovish ECB rate path for 2024.

Beyond the inflation figures, investors must monitor ECB chatter. ECB Executive Board members Kerstin af Jochnick and Piero Cipollone are on the calendar to speak. Support for an ECB interest rate cut in June would support the buyer appetite for DAX-listed stocks.

However, there are no US economic indicators from the US to consider. The lack of data will leave the US equity markets to influence market risk sentiment late in the European session.

Short-term Forecast

Near-term trends for the DAX will likely hinge on ECB and Fed interest rate cut bets. Softer inflationary pressures could signal multiple rate cuts in H2 2024. However, signals of a marked deterioration in the macroeconomic environment could pressure the DAX.

On Wednesday, the DAX futures and Nasdaq mini were down 20 and 24 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX break above the Tuesday all-time high of 17,973 would support a move to the 18,000 handle.

On Wednesday, Eurozone industrial production and ECB commentary need consideration.

However, a drop below the 17,850 handle would bring sub-17,800 levels into play.

The 14-day RSI at 77.14 shows the DAX in overbought territory. Selling pressure could intensify at the Tuesday high of 17,973.

4-Hourly Chart

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

A DAX breakout from the all-time high of 17,973 would bring the 18,000 handle into play.

However, a drop below the 17,850 handle would give the bears a run at the 50-day EMA.

The 14-period 4-hour RSI at 72.59 shows the DAX in overbought territory. Selling pressure may intensify at the all-time high of 17,973.