DAX Index Today: Futures Signal a DAX Run at 18,200 on Fed Reaction

Overview of the DAX Performance on Wednesday

The DAX advanced by 0.15% on Wednesday, closing the session at 18,015. Significantly, the DAX climbed to an all-time high of 18,045 and held onto the 18,000 handle.

German Producer Prices and Eurozone Consumer Sentiment Deliver Gains

On Wednesday, German producer price declined by 4.1% year-on-year in February after falling 4.4% in January. Economists forecast a 3.8% decline in producer prices.

Month-on-month, producer prices fell by 0.4% after rising by 0.2% in January. Economists expected a 0.1% decline in producer prices.

The weaker-than-expected numbers supported bets on a June ECB rate cut. Producers reduce prices in a weaker demand environment, impacting consumer price inflation.

Later in the session, consumer confidence figures for the Eurozone beat forecasts of -15.0. The Eurozone Consumer Confidence Indicator increased from -15.5 to -14.9 in March.

ECB commentary supported the market bets on a June ECB rate cut. ECB President Christine Lagarde discussed June rate cuts, reportedly saying,

“By June, we will have a new set of projections that will confirm whether the inflation path we foresaw in our March forecast remains valid.”

There were no US economic indicators for investors to consider. However, after the European session, the Fed delivered its heavily anticipated interest rate decision and Economic Projections.

FOMC Economic Projections Signal Three Fed Rate Cuts

On Wednesday, the FOMC left interest rates at 5.50%. Moreover, the FOMC projected a 2024 median Fed Funds Rate of 4.6%, unchanged from December. The FFR projection signaled three Fed rate cuts in 2024, driving demand for riskier assets. An upward revision to 2024 growth was also market-friendly.

Fed Chair Powell avoided spooking the markets, saying the Fed will likely cut rates later in the year.

On Wednesday, the Dow and the Nasdaq Composite saw gains of 1.25% and 1.03%, respectively. The S&P 500 advanced by 0.89%.

The Wednesday Market Movers

BASF led the way on Wednesday, rallying 2.53% on a stock upgrade from hold to buy.

However, auto and bank stocks had a mixed mid-week session in anticipation of the Fed policy decision and projections.

Commerzbank gained 0.12%, while Deutsche Bank declined by 0.71%. Bank stocks faced scrutiny after news hit the wires of the US investigating Raiffeisen over plans to acquire a stake in a construction group under the control of sanctioned Russian Oleg Deripaska.

Porsche and Volkswagen saw gains of 0.66% and 0.22%, respectively. However, BMW and Mercedes Benz Group declined by 0.71% and 0.47%, respectively.

Private Sector PMIs, the Economic Bulletin, and the ECB in Focus

On Thursday, preliminary private sector PMIs for Germany and the Eurozone warrant investor attention. A less marked contraction across the German and euro area private sector could drive demand for DAX-listed stocks.

Economists forecast the German manufacturing PMI to increase from 42.5 to 43.1 in March. Moreover, economists predict the services PMI to rise from 48.3 to 48.8.

Forecasts for the Eurozone paint a rosier picture of the euro area economy. Economists expect the manufacturing PMI to increase from 46.5 to 47.0 and the services PMI from 50.2 to 50.5.

However, investors must consider the sub-components, including prices that may influence bets on a June rate cut.

Beyond the numbers, the ECB Economic Bulletin and commentary also need consideration.

US Economic Calendar: Private Sector PMIs and Jobless Claims in the Spotlight

Later in the Thursday session, jobless claims and private sector PMIs also warrant investor attention.

A pickup in US service sector activity and tighter labor market conditions could test bets on a June Fed rate cut.

Economists forecast the US Services PMI to fall from 52.3 to 52.0 and the Manufacturing PMI to decline from 52.2 to 51.7. Moreover, economists expect initial jobless claims to increase from 209k to 215k in the week ending Mar 16.

Other stats include Philly Fed Manufacturing and existing home sales. A larger-than-expected fall in the Philly Fed would garner investor interest. Economists forecast the Philly Fed to fall from 5.2 to -2.3 in Mar.

Beyond the numbers, investors must consider FOMC member commentary. FOMC member Michael Barr is on the calendar to speak.

Short-term Forecast

Near-term trends for the DAX will hinge on private sector PMIs from the euro area and the US. A pickup in demand but downward price trends could boost buyer demand or DAX-listed stocks.

In the futures, the DAX and Nasdaq mini were up 173 and 111 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX return to the Mar 20 all-time high of 18,045 would support a move toward the 18,200 level.

Private sector PMIs and central bank commentary need investor consideration.

Conversely, a fall through the 18,000 handle could give the bears a run at the 17,850 handle.

The 14-day RSI at 77.00 shows the DAX in overbought territory. Selling pressure may intensify at the Mar 20 high of 18,045.

4-Hourly Chart

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

A DAX breakout from the Mar 20 all-time high of 18,045 would give the bulls a run at the 18,200 handle.

However, a drop below the 18,000 handle could signal a retreat to the 50-day EMA.

The 14-period 4-hour RSI at 61.67 indicates a DAX move through 18,100 before entering overbought territory.