DAX Stays Within Striking Distance of Record as German Growth Outlook Wilts and US Inflation Test Beckons

German blue-chip index grinds sideways below 25,000, with defensive stocks masking steep auto losses; key US inflation data and ECB/Fed speeches this week could break the stalemate.

The German blue-chip index has spent the past week grinding sideways just below the psychologically important 25,000 mark, ending Friday at 24,985 points. The modest 1.4% weekly gain masked a stark divergence within the market: defensive strength kept the benchmark afloat while heavyweight auto stocks suffered sharp losses. BMW tumbled more than 10% over the week, and Volkswagen preferred shares shed 9%, underscoring the drag from cyclical exposure.

Investors are now juggling two opposing forces. On the domestic front, the Ifo Institute slashed its growth forecast for Germany next year to just 0.8%, a significant downgrade from earlier projections that signals deepening headwinds for Europe’s largest economy. That gloomy prognosis arrived alongside strong US retail sales data, which reinforced expectations that the Federal Reserve will keep interest rates elevated for longer. The combination has kept the DAX trapped in a narrow band, unable to mount a sustained push above the round-number barrier.

Technically, the index continues to hold above key support levels. Short-term buyers defended the uptrend line at 24,875 points last week, and the 50-day moving average, currently near 24,500, provides a secondary floor. The 200-day line sits further down at 24,245. Resistance clusters around 25,124 to 25,173, with the all-time high of 25,507 just 2% above. The RSI at 56 points to neutral territory, offering little directional bias.

The coming days are packed with events that could break the stalemate. Monday features remarks from ECB President Christine Lagarde and Fed Vice Chair Christopher Waller, both watched for any shift in tone. Tuesday brings the first purchasing managers’ indexes for Germany and the eurozone, a critical early read on economic momentum. Wednesday serves up the Ifo business climate index alongside Nvidia’s annual shareholder meeting and Micron Technology’s quarterly earnings, which often set the tone for the tech sector globally.

Thursday is the main event for rate-sensitive investors. The US will release the final reading of first-quarter GDP and, more importantly, the core PCE price index—the Fed’s preferred inflation gauge. A hotter-than-expected print would likely drag the DAX below the 24,770 support zone, while a moderate reading could fuel a fresh assault on the record high. For now, the index is caught between weak domestic fundamentals and the lingering hope that inflation will cool enough to allow policy easing later this year.