German40 (DAX) Nears All-Time High: Sell Now Below $17975?

The DAX index, the German stock index, maintained its upward trend and hit an all-time high of around 17,973. The driving force behind this surge was the strong performance of automotive stocks, which led the market higher.

Investors largely shrugged off concerns about higher-than-expected US inflation numbers for February, choosing instead to focus on positive developments within the Eurozone. Investor confidence in DAX-listed stocks increased with the possibility of a June rate reduction by the European Central Bank (ECB).

The DAX index has been on an upward trend as a result of declining German inflation in February and predictions of an ECB rate cut in June from figures like François Villeroy de Galhau.

On the data front, finalized inflation numbers from Germany showed a decrease in February, easing from 2.9% to 2.5%.

This supports expectations of a rate cut by the European Central Bank (ECB) in June, especially since ECB officials like François Villeroy de Galhau have already signalled their support for such a move, warning against delaying action.

Investors are also keeping a close eye on industrial production figures for the Eurozone, anticipated to decline in January after a previous increase in December. If the macroeconomic environment weakens further, it could reinforce expectations of a more accommodative stance from the ECB, potentially pushing the DAX index higher.

On the other hand, ECB members like François Villeroy de Galhau and Robert Holzmann have reinforced the bank’s dovish stance. Villeroy de Galhau stressed the need for proactive steps to tackle inflation, hinting at a consensus within the ECB to cut interest rates in the spring.

Holzmann supported this view, leaning towards a rate cut in June but emphasizing the need for cautious projections due to uncertainty. Pierre Wunsch also urged prompt action from the ECB, despite pockets of high inflation.

These dovish comments have boosted investor confidence in the DAX index, as hopes for central bank support drive up demand for DAX-listed stocks.

Moving forward, investors will closely monitor economic indicators and ECB commentary for insights into the future direction of the DAX index.

Despite high inflation suggesting possible delays in interest rate cuts by the Federal Reserve, the US dollar remained weak, likely due to expectations of rate cuts starting in June.

In February, the US Consumer Price Index (CPI) rose by 3.2% compared to last year, slightly exceeding expectations, indicating a slight inflation increase. The Core CPI, which excludes food and energy prices, was 3.8%, slightly higher than predicted.

These numbers suggest ongoing inflation, affecting consumer purchasing power and the economy. This situation has made investors in the DAX index cautious, as they are wary of the potential impact of US monetary policy changes on global markets and trade.

The German40 (DAX) slightly dipped by 0.05% to 17,970.66 on March 13, presenting a nuanced picture for investors. Positioned just below the pivot point of 17,998, the DAX teeters on the edge of a bullish or bearish trend.

With resistance levels set at 18,049, 18,129, and 18,200, there’s room for growth if the index can muster enough momentum. Conversely, support levels at 17,879, 17,794, and 17,709 offer a cushion against potential declines.

The technical indicators, including an RSI of 72 and a 50-day EMA at 17,612, suggest a market leaning towards bullish territory, provided it stays above the pivotal 17,998 mark.

However, a slide below this critical point could signal a shift towards a bearish trend, urging investors to watch closely for any market shifts.