DAX on edge of support as Trump’s 104% China Tariffs Begin

Global financial markets are uncertainmidweek following the implementation of President Donald Trump’s stunning 104% tariff on all Chinese imports. The aggressive move is being interpreted by analysts as the equivalent of a $400 billion tax hike on U.S. businesses and consumers, and betting exchange odds show increasing likelihood of a global recession.

Asia, Europe, and the U.S. around Support

 

• Japan’s Nikkei 225 0.6%
• China 50 4.0%
• FTSE 100 0.05%
• DAX (Germany) 0.5%
• MDAX -1.8%

Europe on Edge

In Europe, the DAX’s appears to have found a support after Tuesday’s -2%. However there is still no technical sign of a bottom as we are now close to the 200EMA, with a sustained breakdown below this level and consequently 18,800 being a real risk.

Meanwhile, the EU’s proposed tariff retaliation package is gaining traction, with digital taxes on U.S. tech firms, reinstated tariffs on American consumer goods, and a potential push for LNG energy deals seen as bargaining chips in future negotiations.

 

Germany 40 (DAX) Technical Analysis

The Germany 40 (DAX) 4-hour chart shows a short-term rebound underway after the steep sell-off earlier this month. The price has climbed back to 19,919.2 (+2.02%), testing the psychological 20,000 resistance zone, which aligns with the previous support-turned-resistance around 20,193–20,474.

Technical Overview:

• Trend: Still bearish overall – price is trading below all major EMAs (20/50/100/200), which are sloping downward.
• EMA 20 at 20,219.3 is acting as dynamic resistance.
• Current bounce is approaching a critical test zone between 20,000–20,474.

 

Indicators:

• RSI (14) at 40.50 – momentum is still weak but no longer oversold. A move above 50 would confirm short-term strength.
• Stochastic RSI near overbought territory (75/72) – suggesting possible exhaustion soon unless confirmed by a breakout.

 

Key Levels:

Resistance:

• 🔵 20,193–20,474 – major horizontal resistance zone.
• 🟠 EMA 20 (20,219), EMA 50 (21,061), and EMA 100 (21,720) → act as step-by-step resistance on any recovery.

Support:

• 18,928 / 18,783 / 18,586 – previously defended demand zones from last week.
• Breakdown below 18,586 would likely trigger a move toward 18,200–17,600.

Summary:

The DAX is in a bear market bounce phase, and unless 20,474 is reclaimed on volume, any recovery remains fragile. Short-term traders may look for confirmation above EMA 20 for potential continuation, while bears will be watching for failure near current resistance to resume the downtrend.

Bias: Bearish unless 20,474 is broken and held.

 

Investor Confidence Evaporates

The tariffs are being seen not just as punitive trade policy but as a systemic shock to global demand and supply chains. JPMorgan analysts estimate that the tariffs are equivalent to a $400B tax hike, disproportionately affecting U.S. households and import-heavy businesses.

"Markets are pricing in more than just trade risk—they're pricing in recession," said Bruce Kasman, Chief Economist at JPMorgan, who raised the probability of a U.S. recession to 60%.

Safe-Haven Volatility and a Surprising Bond Sell-Off

In a curious turn, U.S. Treasury bonds sold off, with yields climbing despite the broader risk-off sentiment. Investors are reassessing the appeal of U.S. assets amid rising inflation expectations and fiscal uncertainty.

Meanwhile, safe-haven currencies surged:

• Japanese yen climbed sharply
• Swiss franc also rallied
• The U.S. dollar, ironically, fell as expectations for Fed rate cuts surged, with futures now pricing five quarter-point cuts in 2025, beginning as early as May

Oil, Gold, and Commodities Under Pressure

Oil prices continued their slide, reflecting concerns over falling global demand:

• Brent: -4% to $64.23/barrel
• WTI: -$1.39 to $60.60/barrel

At 16:30 MET today, the U.S. is expected to release crude oil inventory data, with a build of 2.2M barrels anticipated, following a massive 6.165M increase last week.

Gold, despite a recent surge, fell modestly by 0.3% to $3,026/oz, as investors took profits to cover losses elsewhere.

China Strikes Back: Broad Retaliation Measures

China retaliated with a 34% tariff on all U.S. imports, targeting key American industries:

• Aviation: Boeing faces margin pressure as China shifts orders to Airbus and COMAC
• Semiconductors: Intel and Micron exposed, though Nvidia largely spared due to Taiwan-based production
• Agriculture: U.S. meat, sorghum, and poultry shipments partially suspended
• Farm Equipment: Caterpillar and Deere see increased price sensitivity from Chinese buyers

China also imposed export controls on rare earths and signaled more fiscal and monetary easing to stimulate its domestic economy, already weakened by low consumption.

Upcoming: Fed Minutes, Bond Auctions, and Big Bank Earnings

Markets are also awaiting key macro data that could add fuel to the volatility:

Today’s agenda (MET time):

• 16:30 – U.S. Crude Oil Inventories
• 19:00 – 10-Year Treasury Note Auction
• 20:00 – FOMC Meeting Minutes, which may hint at how close the Fed is to pivoting amid trade-driven growth fears

Friday brings major Q1 bank earnings that could set the tone for corporate America:

Company	EPS (est.)	Revenue (est.)
JPMorgan	$4.62	$43.9B
Wells Fargo	$1.23	$20.75B
Morgan Stanley	$2.26	$16.76B
BlackRock	$10.76	$5.38B

With earnings season beginning amid margin pressure from tariffs, investors are cautious about forward guidance, especially for Q2 and full-year 2025.

Conclusion: Caution Prevails

As both Washington and Beijing dig in, and European policymakers brace for a ripple effect, the path forward remains uncertain. Markets remain extremely fragile, and while some bargain hunting is beginning to emerge, volatility is likely to remain high. Analysts warn this could be just the beginning of a protracted global slowdown, with potential policy shifts from central banks around the world as the next major variable.

For now, “risk-off” dominates, and investors will be watching the Fed’s tone, China’s stimulus path, and diplomatic progress—if any—with extreme focus.