However, an overnight US Federal Court ruling may dampen sentiment as the clock on the 90-day pause on Trump’s tariffs ticks away. The Kobeissi Letter reported:
“A Federal Appeals court has granted the Trump administration’s request to keep President Trump’s tariffs in effect. However, the court will be fast-tracking its consideration of the case on whether tariffs are legal.”
Wall Street Advances on Trade Deal Hopes
US markets posted gains on June 10. Although a full deal remains elusive, markets reacted positively to signs of de-escalation. The Nasdaq Composite Index and the S&P 500 rose 0.63% and 0.55%, respectively, while the Dow ended the session up 0.25%. Notably, Tesla (TSLA) shares rallied 5.67%, reflecting sentiment toward trade talks.
US CPI Report in Focus
Later in the European session on Wednesday, June 11, the US CPI Report will influence market sentiment. Economists forecast the annual inflation rate to rise from 2.3% in April to 2.5% in May and for core inflation to hit 2.9% (April: 2.8%).
Hotter-than-expected inflation figures could further dampen Fed rate cut bets, impacting risk assets, including the DAX. Conversely, softer prints may revive hopes of a Q3 Fed rate cut, boosting risk sentiment.
US-EU Trade Headlines and the DAX
As markets await further details from US-China trade talks, US-EU trade developments also require consideration. Upbeat news could drive demand for DAX-listed stocks, while renewed tensions may extend the DAX’s losses.
Outlook: Key Catalysts for the DAX
The DAX’s near-term outlook depends on the US inflation, trade developments, and ECB commentary.
- Bullish Case: Positive trade headlines, lower US inflation, and dovish ECB cues could send the DAX toward 24,500.
- Bearish Case: Renewed trade tensions, hotter US inflation, or hawkish ECB signals may pull the DAX toward 23,750.
As of Wednesday morning, the DAX futures were down by 155 points, while the Nasdaq 100 mini dropped 64 points, signaling a challenging start to the mid-week session.
Technical Setup Suggests Cautious Optimism
Despite Tuesday’s loss, the DAX remains above the 50-day and the 200-day Exponential Moving Averages (EMA), indicating underlying bullish momentum.
- Upside Target: A breakout above 24,000 could support a move to the June 5 record high of 24,479, with 24,750 the next key resistance level.
- Downside risk: A break below 23,750 brings the May 23 low of 23,275 and the 50-day EMA into play.
The 14-day Relative Strength Index (RSI), at 56.59, indicates the DAX has room to revisit 24,479 without entering overbought territory (RSI > 70).