Germany 30 (DAX) Weekly Forecast: Holds Steady at 18492 Amid ECB Talks

The DAX index, representing Germany’s top 30 companies listed on the Frankfurt Stock Exchange, showed mixed performance recently as it rose by 0.15%, reaching a new all-time high.

However, the key gainers included Siemens Energy AG, Merck KGaA, and Rheinmetall AG, showing positive sentiment in the market. These companies’ strong performance contributed to the DAX’s upward trend. However, the DAX index’s performance is influenced by various factors, including company performances, central bank updates, geopolitical events, and anticipation of global economic policies.

However, the recent developments in central bank policies, particularly the ECB’s discussions on possible rate cuts and the unexpected rate cut by the Swiss National Bank, can be seen as positive news for the DAX index. Francois Villeroy from the ECB thinks hitting the 2% inflation target is doable, but he’s worried about risks if they don’t cut rates.

Fabio Panetta mentioned that they might start making money policies easier. This suggests the ECB is considering ways to help the economy by possibly lowering rates or using other tools to make it easier for people to borrow and spend money.

These moves could boost economic activity and investor confidence, which might have a positive impact on the DAX index and the overall market sentiment.

Furthermore, the Bank of Japan’s accommodative stance indicates ongoing support for economic growth. These factors together create an environment that is generally favorable for stock markets, including the DAX index, as investors may perceive lower rates and supportive central bank policies as beneficial for corporate performance and market sentiment.

On the other side, the United Nations Security Council passed a resolution urging a ceasefire between Israel and Hamas, aiming to reduce geopolitical tensions.

However, the conflict persists, affecting the region’s stability. Geopolitical events can cause market volatility, influencing investor decisions and potentially impacting the DAX index.

On the US front, the anticipation of rate cuts by the US Federal Reserve (Fed) has mixed implications for the DAX index. On one hand, if the Fed implements rate cuts as expected by some investors, it could stimulate economic activity and boost investor confidence globally, potentially benefiting the DAX index.

However, if there is a delay in rate cuts as suggested by Fed Governor Christopher Waller’s hawkish statements, it may lead to a stronger US Dollar Index (DXY), which could negatively impact global markets, including the DAX index. Therefore, the impact on the DAX index remained uncertain as it depends on how the Fed’s actions align with market expectations and economic conditions.

The German 30 (DAX) wrapped up the week on an upbeat note, climbing to a close of 18492, a gain of 1.13%. The 4-hour chart outlines a pivot at 18942.00, a marker just above the current position indicating potential for continued upward movement.

Resistance is found at 18602.33, with further hurdles at 18718.23 and 18862.46, which could limit ascending trends.

Support lies at 18362.95, with additional safety nets at 18251.70 and 18150.43. The RSI is exceptionally high at 86, suggesting overbought conditions that could foresee a consolidation or pullback. Yet, the 50-day EMA at 17532.600 signals a robust upward trend over a broader period.