The German DAX (GER40) continued its upward trend, driven by improving global sentiment and easing concerns about the eurozone. However, caution lingers as traders await key economic updates and navigate ongoing market uncertainties.
German DAX rally faces key resistance
The German DAX (GER40) index maintained its upward momentum on Tuesday, closing at 19,946.15 with a notable 1.45% increase.
This growth aligns with a broader global trend favouring equities, bolstered by positive US economic data and reduced concerns about eurozone resilience.
Despite the rally, the index’s inability to breach the psychological 20,000 level signals traders’ caution ahead of key macroeconomic releases.
Optimism in global equities is supported by stronger-than-anticipated US manufacturing data, alleviating fears of a sharp global demand slowdown.
European markets have mirrored this sentiment, though uncertainties surrounding France’s political climate temper risk appetite. GER40’s resilience reflects a balancing act by traders, leveraging external positives while managing domestic and geopolitical risks.
Technical outlook
The GER40 chart indicates sustained bullish momentum, with short- and medium-term moving averages (5- and 10-period) trending above longer-term averages, confirming the uptrend.
GER40 climbs towards 20,000 resistance, reflecting bullish market sentiment, as seen on the VT Markets app.
Resistance remains at the 20,000 level. A breakout above this threshold could propel the index towards 20,150.
Conversely, support levels at 19,900 and 19,850 may become relevant if traders decide to secure gains amidst lingering uncertainties.
Attention is now on Friday’s US non-farm payrolls report, expected to shape expectations around the Federal Reserve’s next policy decision.
The euro’s ongoing weakness adds another dimension. While a weaker euro boosts export competitiveness, persistent instability could hinder eurozone growth, potentially capping further DAX gains.
Globally, China’s economic slowdown and the yuan’s drop to a one-year low pose potential challenges for European exporters heavily reliant on Chinese markets.
This evolving landscape underscores the delicate balance between optimism from positive data and caution due to external risks, keeping traders alert as they navigate upcoming events.
