DAX and EUR/USD Forecast: Lower Energy Prices and Yields Offer Support
Date: August 26, 2026
In the current market environment, lower energy prices are providing a supportive backdrop for European markets, particularly the DAX index, which has been extending its gains. The decline in oil prices has also contributed to lower yields on longer-dated US Treasuries, easing inflation concerns. However, the sustainability of this trend remains uncertain, raising questions about how much further oil prices and bond yields can decline.
DAX Forecast: Softer Energy Supports Risk Appetite
The DAX has found support from lower energy prices and positive eurozone data. Following US Treasury Secretary Scott Bessent's intervention, longer-dated US yields have decreased by approximately 10 basis points. The recent drop in oil prices has alleviated some inflationary pressures, encouraging investor sentiment.
Additionally, ongoing peace talks, facilitated by Pakistan, have contributed to a reduction in geopolitical risk, further supporting the oil markets. Upcoming events, including the US core PCE inflation report and the Jackson Hole symposium featuring Fed Chair Kevin Warsh, are critical for market direction.
Technical Analysis of DAX
The DAX index has shown resilience, maintaining support around the 25920/5 area, which was previously a resistance level. It has broken above the next resistance levels around 26200, with targets set at 26440 and the all-time high of 26581 if the rally continues. Conversely, if the index falls below the support levels, the next significant level to watch is around 25500/15.
EUR/USD Forecast and Levels to Watch
For the EUR/USD pair, the outlook remains bullish as long as it holds above the 1.1575/70 support area. The pair recently eased back after reaching a target around 1.1700, which corresponds to a 50% retracement of the January-to-June decline. A sustained move below this support could indicate a false breakout.
Upside targets beyond 1.1700 include the next resistance at 1.1800, aligning with the 61.8% Fibonacci retracement level.
Expectations for PCE Data
The upcoming core PCE inflation data is anticipated to be around 0.2% month-on-month, which may keep the dollar steady. However, if the PCE numbers are weaker than expected, the dollar could face modest losses, especially given the current benign risk backdrop. Additionally, preliminary GDP data is expected to remain unchanged at 1.5% year-on-year.
Overall, the combination of lower energy prices, supportive economic data, and upcoming key events is shaping a cautiously optimistic outlook for both the DAX and EUR/USD.