Bull Market Ahead of the Fed Check: A Tense Standoff or DAX Rally Continuation?
Following a period of stabilization over the past weekend, investors on the Frankfurt floor are breathing a sigh of relief. The DAX is starting the new trading week with a healthy dose of optimism—and it’s a week that promises to be eventful. While geopolitical tensions simmer in the background, all eyes are fixed on Wednesday evening. This is when Fed Chair Jerome Powell will announce the first interest rate decision of 2026.
Statistically, the odds for a positive start to the week look promising. Markets often price in a "business-friendly" scenario ahead of such decisions. However, therein lies the danger: if expectations for the US central bank are set too high, disillusionment often follows the actual announcement. A "sell on good news" reaction or disappointment over a too-cautious interest rate path could quickly put the DAX back under pressure.
Geopolitical Powder Keg: Focus on Iran and Ukraine
Despite the dominance of monetary policy, the global situation remains unstable. In particular, the relationship between the US and Iran currently resembles a powder keg. Following widespread anti-regime protests in Tehran, the threat of military intervention has intensified. Should a military escalation occur, it would immediately force global equity markets into "risk-off" mode. Rising oil prices and a flight to safe havens like gold would be the logical consequences.
Parallel to this, there is a cautious glimmer of hope in the East: For the first time in a long while, images of direct contact between Russia and Ukraine—mediated by the US at the UAE summit—have circulated globally. Although substantial changes have yet to materialize, a diplomatic breakthrough could provide the long-awaited signal for a sustained relief rally.
Technical Outlook: The 25,000-Mark as the Tipping Point
From a technical perspective, the situation remains gripping. The DAX is currently fighting to sustainably reclaim the psychologically important 25,000-point mark. Combined with the quarterly earnings of US tech giants like Microsoft and Meta also due this week, increased volatility is to be expected. Investors should remain defensively positioned and keep their stop-loss orders tight.
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