DAX Index Analysis - July 11, 2025

Key Points:

• The DAX fell by 0.38% on July 10, reversing part of a previous rally due to renewed US-EU trade tensions.
• Trade deal optimism diminished following tariff threats from President Trump and vague updates from the EU.
• Despite the drop, the DAX remains above key moving averages, indicating a potential bullish bias.

DAX Performance Overview

The DAX closed at 24,550 on July 10, following a 1.42% gain the previous day. The decline was influenced by President Trump's indication of potential tariff increases, which overshadowed earlier optimism regarding a US-EU trade agreement. European Commission President Ursula von der Leyen mentioned ongoing efforts to secure a favorable trade deal, but concerns about protecting the auto sector emerged as a significant hurdle.

Sector Performance

In the auto sector, BMW's positive third-quarter outlook led to a rally, with the stock rising 4.15%. Other automakers like Porsche, Mercedes-Benz, and Volkswagen also saw gains. Conversely, bank stocks faced pressure, with Commerzbank and Deutsche Bank experiencing losses of 3.96% and 0.41%, respectively.

US Market Reaction

US markets showed resilience, with the Dow and S&P 500 gaining 0.43% and 0.27%, respectively, driven by positive labor market data. Initial jobless claims fell to 227,000, indicating a robust labor market and reducing recession fears. The likelihood of a US recession has decreased significantly, from 66% in May to 20% in early July.

Federal Reserve Outlook

Market participants are closely monitoring Federal Reserve commentary, particularly regarding labor market conditions and monetary policy. The probability of a rate cut in September stands at 67.6%, reflecting ongoing expectations for easing monetary policy.

Technical Analysis of the DAX

Despite the recent pullback, the DAX remains above both the 50-day and 200-day Exponential Moving Averages (EMA), suggesting a bullish outlook. A breakout above the recent high of 24,639 could lead to further gains, potentially reaching 25,000. Conversely, a drop below 24,250 may trigger bearish sentiment, targeting the 24,000 mark.

Conclusion and Outlook

The DAX's near-term performance will largely depend on developments in US-EU trade negotiations and guidance from central banks. Progress towards a trade agreement could propel the DAX to new highs, while escalating trade tensions may lead to declines. Traders are advised to stay alert to these key factors as they navigate the market.