US economic data supported a more dovish Fed stance. The Conference Board Consumer Confidence Index slid from 98.4 in May to 93 in June. Notably, the June survey signaled weakening sentiment toward the labor market and a softer inflation outlook.
Fed Chair Powell Testimony – Day Two in Focus
Later in the June 25 session, Fed Chair Powell will deliver a second day of testimony on Capitol Hill. Investors should watch for any deviation from Tuesday’s script. More compelling arguments to cut rates in September could lift sentiment, potentially sending the DAX higher. However, greater caution about cutting rates may pressure risk assets.
While Powell’s testimony needs consideration, trade developments and updates from the Middle East remain crucial. Key German sectors, including autos, healthcare, and tech, face uncertainty as the July 9 end to the 90-day tariff pause looms.
Outlook: Key Catalysts for the DAX
The DAX’s near-term trajectory hinges on Middle East developments, trade headlines, and central bank commentary.
Bullish Case: Progress toward a US-EU trade deal, an upheld Iran-Israel ceasefire, and dovish central bank cues could drive the DAX toward 24,000.
Bearish Case: Renewed Iran-Israel tensions, stalled US-EU trade talks, or hawkish central bank rhetoric may drag the DAX toward the 50-day EMA.
At the time of writing on June 25, the DAX futures gained 47 points, while the Nasdaq 100 was down 5 points. The Futures markets signaled a choppy start to the mid-week session.
Technical Setup Suggests Cautious Optimism
After Tuesday’s rebound, the DAX trades above the 50-day and 200-day Exponential Moving Averages (EMA), indicating bullish momentum.
Upside Target: A breakout from 23,750 could support a move to 24,000. A sustained move through 24,000 could enable the bulls to target the June 5 high of 24,479.
Downside risk: A break below 23,500 would expose the 50-day EMA. Sustained selling pressure may bring the crucial 23,000 support level into sight.
The 14-day Relative Strength Index (RSI), at 51.18, suggests the DAX could climb to 24,479 before entering overbought territory (RSI > 70).
