DAX Consolidates Amid Tariff Fears and Weak German Data

Over the oceans

Monday night saw a sharp increase in the value of the dollar as US President-elect Donald Trump made renewed announcements of intentions to put tariffs on imports from China, Canada, and Mexico.

On Monday, Treasury rates saw a steep decline, however, seem to have eased slightly.

In Asia, following advances spurred by Scott Bessent's nomination as Treasury Secretary, who is seen as Wall Street-friendly, Asian equities plummeted.

Fears of tariff effects caused trade-sensitive currencies and stocks, such as Japan's export-heavy Nikkei, to fall. Gold steadied after yesterday's steep decline, while news of an Israeli-Lebanese truce also put pressure on oil prices.

Germany: business climate continues to deteriorate

The Federal Statistical Office announced on Friday that the German economy grew by only 0.1 per cent in the third quarter compared to the previous quarter, instead of the expected 0.2 per cent.

In the second quarter, the economy had shrunk by 0.3%. The sentiment indicators for industry and the service sector published before the weekend also show a decline.

In addition, the IFO business climate indicator for Germany, which was published yesterday, fell from 86.5 points in October to 85.7 points.

All this as political uncertainty and trade tariffs are weighing on business sentiment, as the snap elections in Germany are looming at the beginning of next year and Donald Trump is about to take over the White House. Clemens Fuest, President of the ifo Institute, stated: ‘Companies are once again looking at the coming months with a little more scepticism.’ The uncertainty could remain in place until a clearer political course is achieved.

DAX leaders (snapshot at 8:15am)

MTU Aero Engines +1.85%

Rheinmetall AG  +0.99%

Deutsche Telekom +0.63%

Symrise AG +0.38%

DAX laggards (snapshot at 8:15)

Daimler Truck Holdings -4.77%

Volkswagen -2.97%

Bayer -2.86%

Porsche -2.65%

On the agenda today (GMT)

It is a quiet day for Europe today with no major announcements. We are building up events in the US market ahead of tomorrow’s full calendar. The FOMC Meeting Minutes will stand out in terms of expected volatility for today.

13:00   USD                   Building Permits (Oct)

15:00   USD                   CB Consumer Confidence (Nov)     

15:00   USD                   New Home Sales (Oct)

19:00   USD                   FOMC Meeting Minutes         

Germany 40 (DAX) 4-hour chart Technical Analysis

The DAX is currently trading at 19,266.6, showing signs of consolidation after testing higher levels near the top of the Bollinger Bands. The price is now pulling back slightly, suggesting resistance near 19,350–19,400 and potential mean reversion.

Resistance:

The immediate resistance is at 19,350, where the price has recently been rejected.

Above this, the next significant resistance lies at 19,530.5, followed by a key resistance level at 19,680.5, which represents a strong barrier for further bullish continuation.

Support:

Immediate support lies at 19,120.5, which aligns with last week’s volume weighted average low.

Further support can be found at 18,984.7, followed by 18,783.0, which remains a critical level for a broader downside move. Any remaining price action above this level can amplify the bullish bias.

Bollinger Bands:

The DAX recently reached the upper Bollinger Band and is now pulling back toward the middle band, indicating a potential mean reversion.

The middle Bollinger Band, near 19,250, acts as a dynamic support level. A breakdown below this could accelerate bearish momentum.

RSI and Stochastic RSI:

The RSI is at 54.00, showing a neutral-to-slightly bullish bias.

The Stochastic RSI is at 32.18, nearing oversold territory. This could suggest that the current pullback may find support near 19,200, leading to a potential rebound between these levels and 19,200.

Moving Averages:

The DAX is currently trading above the EMA 10 and EMA 20, which are providing short-term dynamic support.

The EMA 50 at aligns in the region of the EMA 200 at 19,200 and reinforces the level around as critical dynamic support.

Conclusion:

The DAX has had the last 3 candles near 19,266.6, with the potential to have found support around these levels. A break above 19,350 (this candles high) would indicate bullish continuation, while a breakdown below 19,250 (candle low) could lead to further downside.

--Written by Philip Papageorgiou – Market Analyst
-Follow me on  X ex Twitter: @PhilipForexCom