Market Analysis: DAX 40 Eyes Record High as Bullish Momentum Builds
By Daniela Sabin Hathorn, senior market analyst at Capital.com
The DAX 40 index remains within striking distance of its all-time high of 24,390, set in late May. While recent sessions have reflected a degree of consolidation, this week has seen a renewed bullish tilt, supported by softer-than-expected Eurozone inflation data.
DAX 40 daily chart:
Past performance is not a reliable indicator of future results.
Inflation Data Fuels Optimism:
Tuesday's CPI release added fuel to the market's optimism. Headline inflation in the Eurozone rose 1.9% year-over-year in May, slightly below the consensus forecast of 2.0%. Core CPI—which strips out the more volatile components such as energy and food—also undershot expectations at 2.3% versus the anticipated 2.4% and notably declined from 2.7% in April. On a monthly basis, both headline and core inflation were unchanged, indicating a stall in price growth.
These subdued readings reinforce the market's expectations that the European Central Bank (ECB) will continue to ease monetary policy. While some members of the ECB's Governing Council have cautioned against moving too quickly, the latest inflation data lends support to a more dovish stance.
Technical Outlook: Momentum Shifts Back to the Upside:
From a technical perspective, indicators continue to favour the bulls. Both short- and long-term moving averages are pointing higher, signalling potential for further gains. Meanwhile, the Relative Strength Index (RSI) has cooled from overbought territory following last week's modest pullbacks, suggesting room for renewed upward momentum.
A sustained breakout above the 24,390-resistance level would confirm the continuation of the prevailing uptrend. However, if such a move pushes the RSI back toward overbought levels, some degree of consolidation may follow before further gains are realized.
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By Daniela Sabin Hathorn, senior market analyst at The DAX 40 index remains within striking distance of its all-time high of 24,390, set in late May. While recent sessions have reflected a degree of consolidation, this week has seen a renewed bullish tilt, supported by softer-than-expected Eurozone inflation data. DAX 40 daily chart: Past performance is not a reliable indicator of future results. Inflation Data Fuels Optimism: Tuesday's CPI release added fuel to the market's optimism. Headline inflation in the Eurozone rose 1.9% year-over-year in May, slightly below the consensus forecast of 2.0%. Core CPI—which strips out the more volatile components such as energy and food—also undershot expectations at 2.3% versus the anticipated 2.4% and notably declined from 2.7% in April. On a monthly basis, both headline and core inflation were unchanged, indicating a stall in price growth. These subdued readings reinforce the market's expectations that the European Central Bank (ECB) will continue to ease monetary policy. While some members of the ECB's Governing Council have cautioned against moving too quickly, the latest inflation data lends support to a more dovish stance. Technical Outlook: Momentum Shifts Back to the Upside: From a technical perspective, indicators continue to favour the bulls. Both short- and long-term moving averages are pointing higher, signalling potential for further gains. Meanwhile, the Relative Strength Index (RSI) has cooled from overbought territory following last week's modest pullbacks, suggesting room for renewed upward momentum. A sustained breakout above the 24,390-resistance level would confirm the continuation of the prevailing uptrend. However, if such a move pushes the RSI back toward overbought levels, some degree of consolidation may follow before further gains are realized.
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