DAX Index Today: German Inflation Data, ECB Rate Cut Odds, and 18,650

Overview of the DAX Performance on Thursday

The DAX advanced by 0.08% on Thursday, closing the session at 18,493. Significantly, the DAX rallied 4.61% in March and ended the first quarter up 10.39%.

German Employment Figures Offset the Impact of Retail Sales Data

On Thursday, German retail sales tumbled by 1.9% month-on-month in February. Economists expected retail sales to increase by 0.3%. However, employment figures painted a rosier economic outlook, with persons in employment up 0.4% year-over-year in February. Month-on-month, employment rose by 14,000 after increasing by 56,000 in January.

US Inflation, ISM Manufacturing, and Fed Chair Powell Send Mixed Signals

The US Personal Income and Outlays Report and Fed Chair Powell comments from Thursday need consideration. However, on Monday, better-than-expected US ISM Manufacturing PMI numbers impacted investor appetite for riskier assets.

The ISM Manufacturing PMI increased from 47.8 to 50.3 in March. The sub-components suggested a pickup in inflationary pressure. The ISM Manufacturing Prices Index jumped from 52.5 to 55.8.

10-year US Treasury yields rose by 2.54%, ending the session at 4.313%. The US equity markets reacted to the PMI numbers and the upswing in Treasury yields.

On Monday, the Nasdaq Composite Index advanced by 0.11%. The Dow and the S&P 500 saw losses of 0.60% and 0.20%, respectively.

The Thursday Market Movers

Auto stocks had a positive end to the first quarter. Volkswagen advanced by 0.89%. BMW and Mercedes Benz Group ended the day up 0.75% and 0.39%, respectively. Porsche gained 0.16%.

Retail stocks also ended the day in positive territory despite falling German retail sales. Adidas gained 1.12% as investors reacted to pre-tax profits for JD Sports. Online retailer Zalando SE rose by 0.11%. A more positive outlook toward the euro area economy and expectations of a June ECB rate cut fueled buyer demand.

German Manufacturing and Inflation in the Spotlight

On Tuesday, the finalized German Manufacturing PMI and preliminary inflation figures need investor consideration. According to preliminary numbers, the Manufacturing PMI declined from 42.5 to 41.6 in March. Revisions to the preliminary PMI numbers could influence sentiment toward the German economic outlook.

However, inflation numbers will impact the DAX more. Economists forecast the annual inflation rate to fall from 2.5% to 2.2% in March. Softer-than-expected numbers could fuel speculation about a May ECB rate cut.

Beyond the numbers, ECB commentary also needs consideration. Talk about a May ECB interest rate cut may drive buyer demand for DAX-listed stocks.

US Economic Calendar: JOLTs Job Openings, Factory Orders, and the Fed

Later in the Tuesday session, JOLTs Job Openings and factory orders will draw investor interest. Economists expect factory orders to increase by 1.0% in February after sliding 3.6% in January. A rebound in factory orders could further reduce fears of a US economic recession.

However, the US JOLTs Job Openings Report could impact riskier assets more. Weaker-than-expected numbers could refuel bets on a June Fed rate hike. A more dovish Fed rate path could support buyer demand for DAX-listed stocks.

Economists forecast Job Openings to fall from 8.863 million to 8.740 million.

Beyond the numbers, central bank chatter could also move the dial. FOMC members John Williams, Loretta Mester, and Michelle Bowman will deliver speeches. Views on the timing of a Fed rate cut could influence the appetite for DAX-listed stocks.

Short-term Forecast

Near-term trends for the DAX will hinge on German inflation numbers and ECB chatter. Softer-than-expected inflation numbers from Germany could raise bets on a May ECB rate cut. However, hawkish Fed speakers could limit the upside.

In the futures, the DAX was up 12 points, while the Nasdaq mini was down by 11 points.

DAX Technical Indicators

Daily Chart

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

A DAX breakout from the March 28 all-time high of 18,514 could give the bulls a run at the 18,650 handle.

ECB chatter, German inflation data, and the US economic calendar warrant investor consideration.

A fall through the 18,450 handle could signal a DAX drop below the 18,350 handle.

The 14-day RSI at 86.93 shows the DAX in overbought territory. Selling pressure may intensify at the March 28 high of 18,514.

4-Hourly Chart

The DAX remained well above its 50-day and 200-day EMAs, reconfirming the bullish price trends.

A DAX return to the March 28 all-time high of 18,514 would support a move to the 18,650 handle.

Conversely, a break below the 18,450 handle could give the bears a run at the 18,350 level.

The 14-period 4-hour RSI at 82.71 shows the DAX in overbought territory. Selling pressure could intensify at the all-time high of 18,514.