DAX Index Forecast: German and US Consumer Confidence to Dictate DAX Trends

Overview of the DAX Performance on Monday

The DAX gained 0.02% on Monday. After a 0.27% rise on Friday, the DAX ended the session at 17,423. Significantly, the DAX reached an all-time high of 17,461.

ECB Rate Cut Bets Deliver a Record High

On Monday, investor bets on an April ECB rate cut propelled the DAX to a record high of 17,461.

There were no German or Eurozone economic indicators to influence market risk sentiment. However, investors turned cautious later in the session, with euro area and US inflation numbers in focus this week.

US Economic Indicators Reverse Early Gains

On Monday, the Dallas Fed Manufacturing Index increased from -27.4 to -11.3 in February. The less marked contraction across the Texan manufacturing sector highlighted resilience in the US economy.

New home sales were also upbeat, rising by 1.5% in January. Economists forecast a 0.9% increase after sales surged 7.2% in December. Economists consider the housing market a litmus test for the US economy. Upward trends in home sales signal consumer confidence in the US economy.

The latest data and caution before US inflation numbers Thursday impacted buyer demand for riskier assets. On Monday, the Nasdaq Composite Index and the Dow ended the session down 0.13% and 0.16%, respectively. The S&P 500 declined by 0.38%.

The Monday Market Movers

Auto stocks had a mixed session after extended gains across three sessions. BMW gained 0.71%, with Porsche rising by 0.18%. However, Volkswagen and Mercedes-Benz Group ended the session down 0.79% and 0.45%, respectively.

Bank stocks also had a mixed start to the week. Commerzbank ended the day up 0.23%, while Deutsche Bank fell by 0.71%.

Rheinmetall AG led the way, rallying 2.80%. Geopolitical tensions continued driving buyer demand for the arms manufacturer.

German Consumer Confidence, Earnings, and the ECB in Focus

On Tuesday, German consumer confidence will be under the spotlight. After a gloomy report for February, a pickup in consumer confidence could ease fears of an extended recession. Economists forecast the German GfK Consumer Confidence Index to rise from -29.7 to -29.0 for March.

Beyond the numbers, ECB commentary also needs consideration. ECB Executive Board member Frank Elderson is on the calendar to speak today. Views on inflation, the economy, and the timeline for rate cuts could influence the appetite for DAX-listed stocks.

However, investors must also consider the corporate earnings calendar. Puma is among the big names to release earnings, putting Adidas in focus.

US Economic Calendar: Durable Goods Orders, Consumer Confidence, and Fed Speakers

Later in the session, US consumer confidence and core durable goods orders warrant investor attention. An unexpected rise in consumer confidence and a larger-than-expected increase in core-durable goods orders could reduce bets on a June Fed rate cut.

Economists forecast the US CB Consumer Confidence Index to remain at 114.8 in February. Moreover, economists expect core durable goods to increase by 0.2% in January after a 0.6% rise in December.

However, FOMC member chatter will also garner investor interest before the US inflation numbers on Thursday. FOMC member Michael Barr is on the calendar to speak. Views on the economy, inflation, and the Fed rate path could move the dial.

Short-term Forecast

Near-term trends for the DAX will likely hinge on Euro area and US inflation numbers. Upward trends in consumer prices could impact bets on ECB and Fed rate cuts and demand for DAX-listed stocks.

On Tuesday, the DAX futures and Nasdaq mini were down 39 and 22 points, respectively.

DAX Technical Indicators

Daily Chart

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

A DAX break above the Monday all-time high of 17,461 would bring the 17,500 handle into play.

Economic data, corporate earnings, and central bank chatter need consideration.

A break below the 17,350 handle would support a move toward the 50-day EMA.

The 14-day RSI at 71.36 shows the DAX in overbought territory. Selling pressure could intensify at the ATH of 17,461.

4-Hourly Chart

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

A DAX breakout from the 17,461 all-time high would support a move to the 17,500 handle.

However, a DAX fall through the 17,350 handle could signal a drop below the 17,250.

The 14-period 4-hour RSI at 74.10 shows the DAX sitting in overbought territory. Selling pressure could intensify at the all-time high of 17,461.