DAX Index Today: Eurozone Inflation and Fed Speakers in Focus

DAX Performance

On Tuesday, July 16, the DAX declined by 0.39%. Following a 0.84% loss on Monday, July 15, the DAX ended the session at 18,518.

The Tuesday DAX Market Movers

Auto stocks were among the worst performers as concerns about demand lingered. Mercedes Benz Group slid by 1.41%, while BMW and Volkswagen saw losses of 1.05% and 1.16%, respectively.

Economic Indicators: Sentiment Wanes

On Tuesday, July 16, the German ZEW Economic Sentiment Indicator fell from 47.5 in June to 41.8 in July, highlighting the weakening economy.

ZEW President Professor Achim Wambach commented on the lower-than-expected July numbers,

“The economic outlook is worsening. For the first time in a year, economic expectations for Germany are falling.”

Eurozone Inflation and the ECB Rate Path

On Wednesday, July 17, finalized Eurozone inflation figures will draw interest as the ECB interest rate decision looms.

The core annual inflation rate remained unchanged at 2.9% in June. Lower-than-expected inflation data could raise investor expectations of September and December ECB rate cuts.

Lower interest rates reduce borrowing costs, increasing profits, a positive for stocks.

US Market Impact

Later in the session on Tuesday, US retail sales garnered investor interest.

US retail sales stalled in June after a 0.3% increase in May. Weaker consumer spending may dampen demand-driven inflation and support multiple 2024 Fed rate cuts.

The US retail sales figures boosted demand for DAX-listed stocks.

However, US retail sales ex-autos beat forecasts, easing fears of a hard landing.

Expert Views and the Fed Rate Path

James Picerno, Editor of the US Business Cycle Risk Report, commented on the retail sales data, saying,

“Another sign that the consumer sector is slowing: US retail sales were essentially flat in June. That’s better than the -0.3% consensus forecast, but the spending trend’s looking softer lately.”

Picerno’s comments aligned with investor expectations of a September Fed rate cut. According to the CME FedWatch Tool, the chances of a September Fed rate cut increased from 99.9% on Monday, July 15, to 100% on Tuesday, July 16.

US Market Trends

The US equity markets ended the Tuesday session in positive territory. The Nasdaq Composite Index and the S&P 500 saw gains of 0.20% and 0.64%, respectively, while the Dow rallied 1.85%.

On Wednesday, the Fed will be in focus.

US Economic Calendar: FOMC Member Speakers in Focus

Later in the Wednesday session, FOMC voting Members Thomas Barkin and Christopher Waller are scheduled to speak. Views on inflation, the economic outlook, and the timing of Fed rate cuts may influence demand for DAX-listed stocks.

Economic data from the US include housing and production-related data. Unless there are significant declines in the data, the Fed speakers may influence market risk sentiment more.

Near-Term Outlook

Near-term DAX trends depend on the Euro area inflation numbers (Wed), the ECB press conference (Thurs), and Fed speakers. Softer inflation numbers and support for September ECB and Fed rate cuts may support a DAX move toward 19,000.

On the Futures markets, the DAX was up by 34 points, while the Nasdaq mini fell by 67 points.

Investors should remain alert as the ECB monetary policy decision looms. Monitor the news wires, economic data, and expert commentary to manage trading strategies. Stay up-to-date with our latest news and analysis to manage risk.

DAX Technical Indicators

Daily Chart

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

A DAX breakout from the 18,500 handle would support a move to the Monday high of 18,744. A break above 18,744 could give the bulls a run at the May high of 18,893.

Eurozone inflation numbers and central bank commentary require consideration.

Conversely, a DAX drop below the 18,500 handle could signal a fall to the 50-day EMA.

The 14-day RSI at 53.65 suggests a DAX return to the May high before entering overbought territory.

4-Hourly Chart

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

A break above the Tuesday high of 18,586 would support a move toward the 18,750 handle.

However, a DAX break below 18,500 would bring the 50-day into play.

The 14-period 4-hour RSI at 53.65 indicates a DAX rise to 18,800 before entering overbought territory.