Philip Papageorgiou

The DAX continues to recover from last week's sell-off, supported by easing energy concerns and improving short-term momentum. While buyers have regained control of the four-hour trend, the index is now approaching a critical resistance zone between 25,450 and 25,600. A decisive break higher would strengthen the bullish case and open the door toward 25,800, while failure at resistance could quickly revive downside pressure.

The DAX started the week on a firmer footing as lower oil prices and hopes of an energy ceasefire between Russia and Ukraine improved market sentiment. However, geopolitical risks remain elevated as ongoing tensions in the Middle East continue to threaten global energy supplies. From a technical perspective, the index remains in a corrective phase and must reclaim the 25,500–25,620 zone to strengthen the bullish case.

The DAX has recovered sharply from its September correction, climbing back above 25,000 after successfully holding long-term support near the 200-day moving average. While the broader bull trend remains intact, the index is now approaching one of the most important technical resistance zones on the chart. A break above 25,500–25,600 would strengthen the bullish case and open the door toward 26,000 and eventually the August record high. Failure at this level would suggest the recent move remains a corrective rebound rather than the start of a new leg higher.

The DAX has opened significantly higher following the Federal Reserve's delivery of its first interest rate hike since 2023. Although the Fed signaled further tightening, the market reaction was surprisingly positive, as much of the hawkish expectation had already been priced in. Attention now shifts to the 25,900–26,000 point range, which will likely determine whether the current recovery evolves into a new upward wave or remains merely a short-covering rally.

The DAX correction now has little to do with corporate news. Rising oil prices, higher bond yields, and the prospect of further interest rate hikes are dominating market activity. Following the strong US PPI report, all focus is now on today's US CPI. The figures could determine whether the current risk-off phase continues or whether the markets can launch a short-term relief rally.

Earnings season has taken a back seat for now. Instead, rising oil prices, higher bond yields, and renewed inflation concerns are shaping market sentiment. Brent crude is trading above $100 per barrel again, while the ECB is poised for another interest rate hike. Investors are now focusing on Christine Lagarde's press conference and today's US producer prices for clues about the future direction of interest rates on both sides of the Atlantic.

The DAX has fallen for three consecutive sessions after reaching a record high on 28 August. Rising oil prices and Bund yields are now challenging the rally, while German business confidence and manufacturing data offer a more constructive signal for the domestic economy.

The FTSE 100 enters the final trading session of August after falling 0.8% on Thursday. Oil, gilt yields and sterling remain critical for the index, but the bigger question is whether investors are underestimating the impact of global rate expectations as September approaches.

The DAX starts close to its record high. Nvidia, interest rates, oil and Jackson Hole are driving trading. Next week, inflation, PMIs and the US labor market will take center stage.