DAX Rebounds as Nvidia Drops, US Dollar Weakens

Market Update – 28 February 2025

Global Markets in Turmoil as Nvidia Plunges, Trump Tariffs Rattle Investors

• Japan’s Nikkei 225 slumped -2.7%, hitting a five-month low as:
• Nvidia’s 8.5% drop on Wall Street sparked a tech selloff.
• Chip stocks fell sharply:
• A stronger yen added pressure on Japanese exporters.

 

• Asian markets followed suit, with:
• Hang Seng (-1.9%), Kospi (-1.5%), and ASX 200 (-1.2%) declining.
• US Treasury yields dropped to two-week lows, as expectations for Fed rate cuts in June & September strengthened.
• Bitcoin dipped below $80,000, now down 27% from its record high, amid broad risk-off sentiment.

Eurozone Focus: German CPI & ECB Outlook

• Germany CPI (MoM) (Feb) expected: +0.4% (Prev: -0.2%).
• Germany CPI (YoY) (Feb) expected: 2.3% (Prev: 2.3%).
• ECB rate cut expectations remain unchanged, following four consecutive cuts.
• EUR/USD at 1.05, up 3.5% in February, as:
• Germany eyes fiscal stimulus post-election.
• US economic weakness weighs on the dollar.

DAX Technical Analysis 4 Hour Chart

The Germany 40 (DAX) 4-hour chart shows a rebound from recent lows after testing key support near 22,200. The price has recovered above the short-term EMAs, suggesting a potential shift in momentum, but it remains below the previous highs, meaning further confirmation is needed for a bullish continuation.

The RSI is stabilizing near mid-range levels, indicating that selling pressure has eased, while the Stochastic RSI is turning upward, signaling a possible short-term upside move. If the price sustains above 22,472, it could lead to a retest of 22,800-22,937 resistance. A breakout above 22,937 would confirm a continuation toward 23,100-23,200.

On the downside, failure to hold 22,200 could lead to further declines toward 21,750 (100 EMA) or even 20,474 (major structural support). Traders should watch whether the price can maintain its recovery or if selling pressure resumes near resistance levels.

US Dollar Weakness Intensifies

• USD is the weakest G10 currency in 2025, surprising markets.
• Factors weighing on the Greenback:
• Weak US consumer sentiment & confidence data.
• Markets now pricing in two Fed rate cuts in 2025.
• Upcoming US tariffs on Canada & Mexico (March 4) increasing uncertainty.
• Upcoming US data to watch:
• Core PCE Price Index (Jan) (YoY) expected: +2.6% (Prev: +2.8%).
• Chicago PMI (Feb) expected: 40.5 (Prev: 39.5).

Investor Sentiment & Market Contrarian Signal

• US retail investors are extremely bearish, with 60.6% expecting lower markets in six months (highest since 1987).
• Only 19.4% are bullish, historically a strong contrarian buy signal.
• Historically, in 90% of similar cases, S&P 500 gained ~13% in six months.

Market-Moving Events Today (GMT)

• 13:00 EUR – German CPI (Feb, MoM & YoY)
• 13:30 USD – Core PCE Price Index (MoM & YoY)
• 14:45 USD – Chicago PMI (Feb)

Market Outlook

• Markets remain volatile, driven by:
• Tech rout after Nvidia’s drop.
• Weakening US economy & dollar.
• Tariff concerns hitting global trade sentiment.
• Eurozone data & US PCE inflation numbers in focus, as traders position for Fed’s next move.
• Bitcoin & crypto remain under pressure, while gold holds near highs amid risk-off flows.
• Potential contrarian buy signal for US stocks, as retail investor sentiment hits extreme bearishness.