Friday Breather: DAX Braces for a High-Stakes ECB Week
Market volatility significantly cooled down on Friday as the DAX found its footing. After a turbulent week, the index successfully stabilized around the 24,350 mark, which once again proved to be a reliable support level. The question now remains: was this merely a brief pause in a larger downward slide, or is there genuine reason to believe the DAX is gearing up for a move back toward the north?
Central Bank Marathon: All Eyes on Frankfurt
The disappointment surrounding the recent Federal Reserve decision appears to have been digested by the market. However, there is no time to relax, as the upcoming week features two major central bank announcements from the Bank of England and, more importantly for German investors, the European Central Bank (ECB) on Thursday, February 5th.
The focus will be squarely on Frankfurt. While the consensus suggests that the deposit rate will remain at its current level of 2.15%, investors will be hanging on every word of the "forward guidance." Any hint regarding the trajectory of rate cuts for the remainder of 2026 could provide the fuel needed for a breakout. Adding to the tension, Friday will bring the US Non-Farm Payrolls, a heavy-hitter that traditionally dictates the sentiment for the weekly close.
Geopolitics and Technicals: Calm Before the Storm?
Provided that no further negative headlines emerge regarding the geopolitical situation in Iran, we can expect a relatively calm start to the week characterized by technical trading. While the US Manufacturing PMI is due at 4:00 PM today (Monday), its impact on the DAX is expected to be manageable as long as the data doesn't deviate wildly from forecasts.
Technical Summary: The 24,350 Line of Fate
From a technical perspective, the situation remains gripping. The current support level at 24,350 points is the "make-or-break" line for the index. As long as this floor holds, the possibility of a recovery remains intact. However, should this bastion fall, the DAX could face a rapid slide toward the 24,000 mark—a scenario from which the index would likely struggle to recover in the short term.
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