The DAX index, the German stock market index tracking the top 40 companies, maintained its upward trend and experienced a strong rally on Friday, marking a 1.47% increase and closing at 17,371. However, the performance of the DAX index is influenced by a combination of factors, including economic data, central bank policies, corporate earnings, and geopolitical events.

It is worth mentioning that auto stocks, including Porsche and Mercedes-Benz Group, led the charge with impressive gains, supported by better-than-expected earnings reports.

Furthermore, the tech sector witnessed significant activity, with companies like SAP and Infineon Technologies experiencing notable increases in their stock prices. Additionally, positive sentiment from the US, particularly driven by strong earnings from NVIDIA, further bolstered investor confidence in DAX-listed stocks.

ECB Stance and Eurozone Data Influence

On the Eurozone front, European Central Bank’s (ECB) stance and Eurozone economic data play a crucial role in shaping the performance of the DAX index. Despite concerns over a potential Eurozone recession, upbeat Eurozone Services PMI numbers provided relief to investors.

Moreover, the German Services PMI, although slightly below expectations, indicated a moderate improvement. However, the finalized Q4 GDP numbers for Germany revealed a contraction, raising speculation about the possibility of an ECB rate cut in April.

ECB members’ remarks, including those of President Christine Lagarde and Executive Board member Isabel Schnabel, also influence market sentiment and investor decisions regarding DAX-listed stocks.

Therefore, the upbeat Eurozone Services PMI numbers and moderate improvement in German Services PMI are positive for the DAX performance, offering relief to investors amid concerns over a potential Eurozone recession.

Federal Reserve Stance and US Economic Data Impact

On the US front, the Federal Reserve’s stance on interest rates and US economic data exert significant influence on the DAX index. It should be noted that the previously released weaker-than-expected US Services PMI figures raised expectations of a Fed rate cut in June, contributing to market uncertainty.

However, comments from Fed officials, including Vice Chair Philip Jefferson and Governors Lisa Cook and Christopher Waller, expressing caution about cutting rates too quickly amid persistent inflation, tempered these expectations.

Further, positive US economic indicators, such as declining initial jobless claims, supported the notion of a US soft landing, contributing to investor confidence in DAX-listed stocks.

Geopolitical Issues and Their Impact

Apart from this, the geopolitical tensions, particularly concerning the Israel-Gaza conflict, can cap gains in the DAX index as the escalation of violence and humanitarian crises in Gaza can create uncertainty in global markets, affecting investor sentiment.

Investors closely monitor developments in geopolitical hotspots like the Middle East to assess potential risks and adjust their investment strategies accordingly.

DAX Price Forecast: Technical Outlook

The DAX index slightly retreated by 0.03%, closing at 17,362.80, indicating a minor pullback in an otherwise bullish market environment.

Holding firmly above the pivot point of 17,336.19, the index faces immediate resistance levels at 17,429.06, 17,517.37, and 17,599.05, suggesting potential barriers to upward momentum.

Conversely, support levels are established at 17,277.90, 17,183.39, and 17,090.00, providing a safety net against further declines.

The RSI at 71 signals heightened buying activity, while the 50-day EMA at 17,037.51 supports a bullish outlook.

The DAX’s current stance above the 23.6% Fibonacci retracement level reinforces a positive trend, with a watchful eye on the 38.2% retracement mark at 17,276 for additional support indicators.

Consequently, the overall trend for the DAX remains bullish above 17,336.19, reflecting sustained investor confidence and the potential for continued market gains.