DAX Edges Higher as Traders Await ECB Meeting and German Data Miss

The DAX Index is trading at 18,553.19, up 0.07% on Thursday, as it looks to recover from recent lows. Traders are focused on weak German economic data and the highly anticipated European Central Bank (ECB) policy meeting later today.

Weak German Data and Italian UnemploymentGerman Wholesale Price Index (WPI) data for August showed a -0.8% decline, falling well below expectations of a 0.1% increase. This disappointing figure has raised concerns over softening inflationary pressures in Germany, Europe’s largest economy.

📊 European #stocks up ahead of #ECB decision 📈

The #STOXX 600 #SXXP gained over 1% today with miners' and #tech shares carrying the weight, while markets await whether the #EuropeanCentralBank is going to opt for cutting interest rates for a second time this year. ⏳#Indices pic.twitter.com/EjuVBiSZlQ

— XBTFX (@XBTFOREX) September 12, 2024

On a more positive note, Italy’s quarterly unemployment rate came in at 6.8%, beating estimates of 7.1%, which offered relief to the broader Eurozone labour market.

DAX Technical Outlook

The DAX has found support at 18,438.13 and is testing the 50-period Exponential Moving Avaerge (EMA) at 18,504.97, a key resistance level in recent trading.

Should the DAX break above this EMA, the index could aim for the next resistance zone at 18,680.46, with further upside potential toward 18,833.14.

However, failure to clear the 50 EMA could lead to a reversal toward key support levels. Immediate support is seen at 18,438.13, with further levels at 18,170.85 and 18,006.19.

The Relative Strength Index (RSI) stands at 56.56, signalling moderate bullish momentum but leaving room for further upward movement without entering overbought territory.

ECB Rate Decision and Market Impact

Later today, the ECB is expected to announce a 50-basis-point hike, raising the Main Refinancing Rate to 4.25%. The central bank’s post-decision press conference will be closely watched for any forward guidance on future rate hikes or a potential shift in tone.

In less than one hour, investors will be ready to perform linguistic analysis on the European Central Bank press conference.

Why?

Because right now, there's a broad consensus that ECB will cut interest rates by 0.25%

So even if they carry through, that won't move the needle.… pic.twitter.com/t5t1p1Kmtw

— Ulrik K. Lykke (@ulriklykke) September 12, 2024

A more hawkish stance could pressure European equities, while a dovish approach may lift investor sentiment.

Outlook for the DX

In the short term, the DAX’s direction hinges on breaking the 50 EMA. A sustained move above 18,504.97 could target higher levels, while failure to break through this resistance may lead to a pullback.

$XD will bounce back

Dev has cracked the attention matrix

This is a buy opp seasonal bottom range

under key ranges and oversold

still #bullish pic.twitter.com/tLJYZJAiIe

— Hami Bennett Ballers (44.4%) (@BennettHamiora) September 12, 2024

With the ECB decision looming, volatility is expected to increase, making this a pivotal moment for the DAX.