DAX Index Forecast: German Inflation Data and Trade Tensions Shape Market Outlook

The German DAX Index extended losses for a second consecutive session on May 29, slipping 0.44% to close at 23,933 as global trade tensions and inflation expectations weighed on investor sentiment. The pullback follows Wednesday’s 0.78% decline, signaling growing market caution amid renewed uncertainty around tariffs and interest rate policy in both the EU and the US.

🔍 Trade Policy in Focus as Tariff Appeal Reignites Market Jitters

Early in Thursday’s session, the DAX briefly surged to 24,255 following a U.S. court decision to block the controversial “Liberation Day” tariffs. However, an appeal filed shortly after reversed optimism, sending risk assets lower. The unresolved trade dispute continues to create headwinds for German exporters, particularly auto manufacturers like BMW (-1.58%), Volkswagen, and Mercedes-Benz, which all posted losses.

📊 German Retail Sales and Inflation Data Could Guide ECB Policy

Investors now turn their attention to key German economic indicators due May 30, including:

• Retail Sales (April) – Forecasted to rise 0.2% month-on-month, signaling potential consumer resilience.
• Inflation Rate (May) – Expected to dip slightly to 2.0%, just below the ECB’s target.

A softer inflation print could boost expectations of a European Central Bank (ECB) rate cut, lowering borrowing costs and potentially driving a rebound in DAX-listed stocks. However, a surprise uptick in prices may stall those bets, putting further pressure on equities.

💡 US Core PCE Report May Shift Global Market Sentiment

Later in the day, traders will closely monitor U.S. Core PCE inflation data, the Fed’s preferred inflation gauge. April’s reading is projected at 2.5% YoY, down from March’s 2.6%. A weaker-than-expected result may reinforce hopes for a Q3 Fed rate cut, supporting broader risk sentiment. Conversely, stronger data could renew stagflation fears, impacting global equity markets including the DAX.

🔧 DAX Technical Outlook: Will 24,500 Be Revisited?

Despite recent losses, technical signals remain cautiously bullish:

• The index remains above its 50-day and 200-day EMAs, indicating underlying strength.
• The 14-day RSI sits at 60.77, suggesting room for further upside before reaching overbought levels.

Key Levels to Watch:

• Resistance: 24,326 (May 28 high), followed by 24,500 and 24,750.
• Support: 23,750 (psychological level), with deeper downside toward 23,275 and 23,000.

📉 Futures Market: Weak Open Expected

As of Friday morning, DAX futures were down by 51 points, while Nasdaq 100 mini futures fell 69 points, reflecting nervous sentiment around trade and inflation updates.

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