Relief Rally Meets Rate Reality: DAX Holds Near 25,000 as PMI Data Looms

German index ends week just below 25,000 after US-Iran de-escalation sparks relief, but hawkish Fed signals and packed economic calendar keep traders cautious.

The German benchmark has spent the past week circling the 25,000-point watermark, but the forces that will decide the next move are pulling in opposite directions. A sudden de-escalation in US-Iran tensions sparked a relief rally on Monday, yet the prospect of higher interest rates from the Federal Reserve — and a packed calendar of economic releases — is keeping traders on edge. The index ended Friday at 24,986 points, just a whisker below the psychological milestone, after briefly touching an intraday high near 25,150 during options expiry.

The immediate catalyst for Monday’s upbeat session came from Washington, where the White House called off a planned military strike against Iran. Brent crude slid nearly 5% to $83 a barrel, its lowest since March 10, marking a stark reversal from earlier fears that had pushed the energy benchmark below $77 in the preceding days. The euro responded by climbing to $1.1615, while Frankfurt’s export-heavy components — long rattled by trade uncertainty — got an additional tailwind after the European Parliament cleared the way for a tariff deal with the US.

Tech-savvy names like Infineon led the charge. The chipmaker, now a consensus analyst pick with 24 out of 31 experts rating it a buy, is benefiting from a compression in sector risk premiums as geopolitical heat dissipates. Elsewhere in the blue-chip index, RWE drew attention on reports it may be circling grid operator Amprion, while UniCredit continued to build its stake in Commerzbank. Deutsche Bank, a standout performer last week with a 4.3% gain, added to the bullish undercurrent.

Chart technicians see the index still trapped in a range between 24,770 and 25,100 points. The 50-day moving average at 24,511 provides a safety net, with the DAX trading roughly 2% above it, and the 200-day line sits a comfortable 3% below current levels. The relative strength index at 56.5 points to neither an overbought nor oversold condition. A clean break above 25,114 — the intraday high from June 16 — would open the door to the all-time peak of 25,508 set on January 13. On the downside, a slide below 24,770 would darken the technical picture substantially.

Yet the macroeconomic calendar threatens to disrupt this delicate equilibrium. All eyes are on Tuesday’s purchasing managers’ indices for Germany and the eurozone, the first major test of the week. Weak readings would amplify pressure on the European Central Bank and could pull the DAX toward the lower end of its range. Later in the week, the US delivers a heavy data block: GDP and jobless claims on Thursday, followed by the University of Michigan consumer sentiment reading on Friday.

Compounding the uncertainty is the Fed’s renewed hawkish tilt. Newly installed Chair Kevin Warsh is grappling with stubborn inflation, and market chatter has shifted from rate cuts to the possibility of rate increases come autumn. That backdrop, combined with a US long weekend that kept volumes thin, led Thomas Altmann of QC Partners to caution that the current rally may lack staying power. Helaba, while describing the technical setup as “constructive,” warned that a sustained push above 25,000 points could remain elusive for now.

For the week ahead, analysts project a trading corridor of 24,780 to 25,590 points. The record high at 25,508 remains the overarching chart target, but the path to it depends on whether geopolitics continues to cooperate or if macro headwinds reassert themselves. With a BDI press conference featuring President Peter Leibinger setting the political tone on Monday, the stage is set for a decisive — and potentially volatile — session on Tuesday.