DAX Enters Central Bank Week with Caution
For today, Monday, a restrained start with a slight downward bias appears likely. The market enters the new week carrying a sense of "weekend fatigue" that set in on Friday. Equity markets continue to lug around the heavy burden of the war involving Iran—a weight that acts as a catalyst for surging oil prices, which in turn fuels inflation fears. This, naturally, has central banks reconsidering potential interest rate pivots. This brings us to the critical monetary policy decisions scheduled for this week.
On Wednesday, the Federal Reserve will announce its decision, followed on Thursday by the Bank of England and the European Central Bank (ECB). It will be fascinating to see how these institutions position themselves from an macroeconomic perspective regarding the conflict. Statistically, stock markets often tend to rise ahead of such decisions in anticipation of supportive central bank rhetoric. However, these market expectations are frequently "priced in," often leading to a pullback in the second half of the week once the actual statements are released. Whether this statistical pattern holds true against the backdrop of the current geopolitical crisis remains to be seen.
Technical Summary: Bears Lurking Near 23,350
Technically, the DAX remains in a daily downtrend following another weak week. Downward momentum accelerated slightly toward the close on Friday, which could lead to further discounts at the Monday open.
The defense lines are clearly drawn:
Immediate Support: Thursday’s low at approximately 23,350 points.
Next Bastion: Should this support break, the next major psychological level lies at 23,000 points.
Volatility remains exceptionally high, and as long as oil prices signal no relief, the bears technically maintain the upper hand.
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