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.
