The DAX was positive again on Wednesday, but investors seem to lack conviction ahead of the ECB meeting. While the index appears to be fundamentally back on a record course, the DAX still seems to be missing that final push. Yesterday closed with a gain of 0.77 percent at 22,276.48 points. However, the US session pushed the DAX back down somewhat, which could indicate that problems in the US are more severe than initially assumed. Economic data and hiring in the US are declining, and the market needs assurance from the Federal Reserve that another interest rate cut is coming. The Federal Reserve, for its part, remains relaxed and is closely monitoring the situation surrounding increased tariffs. Ultimately, it's about ensuring price stability with regard to inflation. Consequently, investor buying interest is weakening. From an economic perspective, the Purchasing Managers' Index, considered a leading indicator, clouded over accordingly, thus confirming the cautious and reserved stance of market participants.
ECB Decision - Will Lagarde Set the Stage for a Strong Europe?
The ECB will meet this Thursday to decide on the eurozone's key interest rate as part of its monetary policy. In turbulent economic times, conviction is needed to confidently strengthen the eurozone from a monetary policy perspective. The EU is sending a signal by admitting Bulgaria into the Eurozone from January 1, 2026, thereby expanding the Eurozone by another member. The market's expectation is that the ECB will announce another interest rate cut today. With appropriate justification, this could ignite the next record level for the euro, detached from the US markets.
For the euro itself, which is currently stable around 1.14 US dollars, this could mean a slight weakening with a sufficiently expansive stance from the ECB, which can afford this given the inflation rates reported at the beginning of the week. An exciting Thursday lies ahead; investors are eager to see how Lagarde will justify the ECB's decision and whether the ECB will meet market expectations or even surprise.
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.