KEY POINTS:
- DAX 40 rises above the 25,000 level
- Softer Eurozone inflation eases ECB tightening risks
- Positive risk sentiment keeps the bulls in charge
- US Supreme Court decision on Trump’s tariffs could spark a rally in risk assets
FUNDAMENTAL
OVERVIEW
The German DAX has finally
broken out of the 2025 range and extended the gains into new record highs above
the 25,000 level. The risk sentiment has been positive in the past few days,
and a couple of economic data gave the bulls more conviction to keep pushing
into new highs.
In fact, we just got the
latest inflation readings for Germany and Eurozone as a whole, and they showed
a welcome easing. One of the biggest risks for 2026 has been the risk of earlier
than expected rate hikes.
The softer inflation data
not only eases the tightening risk but also gives traders hope for more rate
cuts down the road. Couple that with easing tariff uncertainty and fiscal boost
and you get a positive outlook for the stock market.
Moreover, yesterday the US
Supreme Court scheduled Friday as an opinion day, which could see a decision on
Trump’s tariffs. In case the tariffs are struck down, the DAX is likely to rally on expected better global growth. On the other hand, if tariffs are kept in place,
it shouldn’t change much given that the markets have already adjusted to the tariffs.
DAX 40 TECHNICAL
ANALYSIS – DAILY TIMEFRAME
On
the daily chart, we can see that
the DAX (CFD contract) broke out of the
2025 range and extended the gains above the 25,000 level. The buyers piled in
on the breakout with a defined risk below the resistance-turned-support. The
sellers will now need to see the price falling back below the previous all-time
high to regain some control and start positioning for a drop back into the
23,000 level.
DAX 40 TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
On
the 4 hour chart, we can see that
we have a couple of upward trendlines defining the bullish momentum. If we get
a pullback into the support zone around the 24,700 level, we can expect the
buyers to step in with a defined risk below the trendline to keep pushing into
new highs. The sellers, on the other hand, will look for downside breaks to target
new lows.
DAX 40 TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can
see that we have a minor trendline defining the bullish momentum on this timeframe.
Aggressive buyers might lean on the trendline to keep pushing into new highs,
although from risk to reward perspective, the area around the major support
would offer a much better dip-buying opportunity. The sellers, on the other
hand, will look for a break lower to pile in for a pullback into the major
support.
UPCOMING CATALYSTS
Today we have the US ADP, the US ISM Services PMI and the US Job Openings
data. Tomorrow, we get the latest US Jobless Claims figures. On Friday, we
conclude the week with the US NFP report and a potential US Supreme Court decision on Trump’s tariffs.
This article was written by Giuseppe Dellamotta at investinglive.com.