DAX Index Today: ECB Commentary and Tech Stock Turbulence

The Overview of the DAX Performance

The DAX declined by 0.56% on Friday. Reversing a 0.38% gain from Thursday, the DAX ended the session at 17,737. Significantly, the DAX fell to a session low of 17,627 before retaking the 17,700 handle.

Geopolitical Tensions in the Middle East Impacted Risk Appetite

On Friday, reports of Israel retaliating against the April 13 attack by Iran impacted market risk appetite. However, news of Iran downplaying the attack eased immediate investor fears of a widespread Middle East conflict.

German Producer Prices Unexpectedly Climb in March

Producer prices for March drew investor attention amidst rising expectations of a June ECB rate cut. Month-on-month, producer prices advanced by 0.2% after falling by 0.4% in February.

Producer prices declined by 2.9% year-on-year after falling 4.1% in February. Economists forecast producer prices to decrease by 4.2%.

The better-than-expected numbers supported expectations of an improving demand environment. Nevertheless, the numbers had a limited impact on ECB interest rate chatter. ECB President Christine Lagarde said inflation would likely continue to fall, supporting an interest rate cut.

The Fed and US Corporate Earnings

On Friday, fading investor bets on multiple Fed interest rate cuts impacted market risk sentiment. Concerns about rising tensions in the Middle East also affected buyer demand for riskier assets.

Chicago Fed President Austan Goolsbee echoed comments from Fed Chair Powell, reportedly saying the current monetary policy position is appropriate to bring inflation to the 2% target.

Investor jitters before key US corporate earnings results and market risk aversion impacted tech stocks.

On Friday, the Nasdaq Composite Index slid by 2.05%, with the S&P 500 falling by 0.88%. The Dow advanced by 0.56%.

The Friday Market Movers

Tech stocks stumbled, with Infineon Technologies and SAP falling by 2.43% and 2.00%, respectively.

Auto stocks also felt the impact of market risk aversion. Continental AG slid by 1.80%. BMW and Mercedes Benz Group saw losses of 1.03% and 0.90%, respectively. Porsche declined by 0.83%, with Volkswagen falling by 0.62%.

Sartorius AG extended its losses from Thursday, declining by 2.62% after missing revenue and order expectations.

Eurozone Consumer Confidence, the ECB, and Earnings

On Monday, Eurozone consumer confidence figures for April will draw investor attention. Better-than-expected numbers would align with the expectations of an improving economic outlook.

Economists forecast the Eurozone Consumer Confidence Index to increase from -14.9 to -14.0.

With investors focused on the ECB, ECB commentary also needs consideration. ECB President Christine Lagarde is on the calendar to speak. Views on the economic outlook, inflation, and monetary policy could move the dial.

Beyond the economic calendar, investors must consider corporate earnings results. SAP is among the big names to release earnings.

US Economic Calendar: Chicago Fed National Activity Index and Earnings

On Monday, the Chicago Fed National Activity Index will garner investor interest. Economists forecast the Index to increase from 0.05 to 0.09 in March. Higher-than-expected numbers would support expectations of the US avoiding a US economic recession.

However, the numbers are unlikely to influence sentiment toward the Fed rate path. Service PMI and Core PCE Price Index numbers on Tuesday and Friday will impact Fed rate cut bets.

On the earnings calendar, Verizon Communications Inc. (VZ) is among the big names to release earnings results.

In Futures trading, the DAX and Nasdaq mini were up 59 and 68 points, respectively.

Near-Term Outlook

Near-term trends for the DAX will hinge on private sector PMIs, US inflation, ECB chatter, and corporate earnings. Rising bets on a June ECB rate cut would drive buyer demand for DAX-listed stocks. However, corporate earnings could overshadow sentiment toward ECB monetary policy plans.

DAX Technical Indicators

Daily Chart

The DAX sat below the 50-day EMA while holding above the 200-day EMA, sending bearish near-term but bullish longer-term price signals.

A DAX break above the 50-day EMA would support a move toward the 18,000 handle. A breakout from 18,000 would bring the 18,200 handle into view.

Consumer confidence, corporate earnings, and ECB commentary need consideration.

However, a drop below the 17,615 support level could signal a fall through the 17,500 handle.

The 14-day RSI at 41.29 suggests a DAX drop to the 17,500 handle before entering oversold territory.

4-Hourly Chart

The DAX hovered below the 50-day EMA while remaining above the 200-day EMA, confirming the bearish near-term but bullish longer-term price trends.

A DAX return to the 17,800 handle would support a move to the 50-day EMA. Selling pressure could intensify at the 18,000 handle. The 50-day EMA is confluent with 18,000.

Conversely, a break below the 17,615 support level and the 200-day EMA could give the bears a run at the 17,500 handle.

The 14-period 4-hour RSI at 39.01 indicates a DAX break below the 17,615 support level before entering oversold territory.