Dax Index News: Bullish Outlook Today as US-EU Trade Deal Boosts Market Sentiment

EU Commission President Ursula von der Leyen remarked:

“Together, the EU and the US are a market of 800 million people. And nearly 44 percent of global GDP. It’s the biggest trade deal ever.”

Wall Street Advances on Optimism Toward a US-EU Trade Deal

US markets posted gains on July 25, as hopes for a US-EU trade agreement bolstered demand for risk assets. The Nasdaq Composite Index and the S&P 500 closed at record highs after rising 0.24% and 0.40%, respectively, while the Dow climbed 0.47%.

Decker Outdoor (DECK) jumped 11.35% after beating quarterly earnings estimates. However, Intel (INTC) plunged 8.53% after the firm signaled sharper quarterly losses and warned of job cuts.

US Dallas Fed Manufacturing Index in Focus

Later in the Monday session, US economic data also requires consideration as Wednesday’s Fed interest rate decision looms.

Economists forecast the Dallas Fed Manufacturing Index to rise from -12.7 in June to -8 in July. A higher Index reading could signal improving demand after Friday’s upbeat durable goods orders ex transportation numbers. Easing recession risks may boost demand for risk assets such as the DAX. Investors may brush aside a weaker print after the trade deal.

Outlook: Key Catalysts for the DAX

The DAX’s near-term outlook hinges on the US-EU trade deal, US data, and ECB commentary.

• Bullish Case: A US-EU trade deal, upbeat US data, and dovish central bank rhetoric. These factors could drive the DAX toward its record high of 24,639 and potentially 25,000.
• Bearish Case: Weak US data or hawkish central bank signals may push the DAX toward 24,000, bringing the 50-day Exponential Moving Average (EMA) into play.

At the time of writing on July 28, the DAX futures jumped 229 points, while the Nasdaq 100 was up 127 points. Markets reacted to the news of the US-EU trade deal.

DAX Technicals

Despite Friday’s loss, the DAX remains above its 50-day and 200-day Exponential Moving Averages (EMA), indicating a bullish bias.

• Upside Target: A breakout above 24,500 could pave the way to the July 10 record high of 24,639. A sustained move above 24,639 may bring the 25,000 level into sight.
• Downside risk: A break below 24,000 could enable the bears to target the 50-day EMA.

The 14-day Relative Strength Index (RSI), at 54.06, suggests the DAX could climb to 24,639 before entering overbought territory (RSI > 70).