DAX forecast: Ceasefire optimism supports risk appetite

Markets are taking Trump’s latest declaration with a degree of caution. His claim that “we ended the war with Iran” triggered an immediate risk-on reaction, pushing oil prices sharply lower and lifting equities. While those moves have extended modestly into today, the follow-through remains surprisingly restrained for what would be a significant geopolitical breakthrough. Investors will also be monitoring the highly anticipated Nasdaq debut of SpaceX, which has generated considerable enthusiasm in pre-market pricing. A diplomatic breakthrough in the Gulf would certainly provide a supportive backdrop for the German DAX forecast and the broader risk sentiment.

 

DAX forecast: falling oil prices welcome relief for European assets

 

Investors have seen similar episodes before. White House announcements suggesting at imminent agreements have not always translated into lasting settlements. For now, attention turns to Tehran. Reports indicate that the proposed framework has yet to receive approval from the relevant Iranian authorities, leaving some uncertainty over whether a formal agreement is actually within reach.

 

Markets initially welcomed Trump’s declaration yesterday. The reaction was most visible in energy markets, where oil prices took a drop and this encouraged traders elsewhere to take on a bit of risk.

 

There appears to be growing momentum behind a potential arrangement that would allow shipping through the Strait of Hormuz to resume more freely while enabling Iran to return additional crude supplies to global markets. That would undoubtedly ease concerns about energy shortages and inflation pressures, providing support for markets that rely heavily on energy imports, including European assets.

 

However, there are still important hurdles to overcome. Iranian officials have not publicly endorsed the reported framework, and questions remain over whether Tehran will seek additional concessions before signing any deal. For now, investors remain cautious – and that’s been reflected in the DAX’s inability to add any further significant gains after yesterday's rally.

 

Today’s trading session is likely to be dominated by headlines related to Iran, including whether senior US officials travel to Europe for negotiations and whether Iran confirms its willingness to participate. Until clearer signals emerge, markets could remain highly sensitive to every headline crossing the wires.

 

Even if a deal is eventually secured, the broader economic consequences of recent supply disruptions may linger. Energy markets have absorbed a significant shock over recent weeks, and unless oil flows normalise quickly through the Gulf, price pressures could remain elevated well into the late summer. But the relief rally could still see European indices like the DAX head to new all-time highs.

 

Technical DAX forecast: Key levels to watch

 

From a technical analysis point of view, the German DAX index formed a large bullish engulfing candle on the daily timeframe as it held support around the 24,000 level—a key support zone that needed to hold, and so far, it has. As long as this level remains intact, there is scope for renewed gains in the German stock market.

 

 

Importantly, the index is once again above the 200-day moving average, which is currently sitting around the 24,200 area, providing another layer of potential support should we see renewed weakness in today’s session.

 

Before reaching those levels, however, the 24,500 region—marking Wednesday’s high—is the first and most important level to watch. This area now needs to hold to keep bullish traders confident as they await further positive developments from the Middle East, which could provide the catalyst needed to push the index back toward record highs.

 

So far, that has not happened. While major US indices, particularly the Nasdaq, have continued to reach fresh record highs, the DAX has yet to follow suit. It came close to its January highs in late May, but bullish momentum subsequently faded.

 

That said, yesterday’s rally has injected fresh momentum into the market. The key question now is whether this marks a turning point. If buyers can build on these gains, the 25,000 level becomes the next major resistance to watch. Above that sits the January high around 25,500.

 

A break above that level could pave the way for a move toward fresh all-time highs, with 26,000 representing the next major upside objective due to its psychological significance.

 

 

 

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R