The gains are modest ahead of this week’s ECB rate decision. The central bank is in a wait-and-see mode ahead of meetings.
The DAX rose slightly ahead of this week’s ECB rate decision and despite higher oil prices
The DAX, along with European markets, opened the week on a strong footing, despite a backdrop of rising geopolitical tensions and higher oil prices.
Investors are focused on developments between the US and Iran, where peace talks appear stalled and the Strait of Hormuz is blocked.
As a result, prices have risen to around $108 per barrel, up from last week. Rising energy prices are dampening inflation expectations and pushing up bond yields. Government bond yields have risen more than 3 percent, while Treasury yields are also rising, now above 4.3 percent.
Despite these headlines, European equities have managed to rally. However, the situation remains a risk, especially if tensions persist beyond mid-year. For now, markets seem to be pricing in the possibility that disruptions in energy prices will be temporary or contained.
On the data front, German consumer confidence fell to a three-year low, highlighting the pressure that higher energy prices and a worsening inflation outlook are putting on households.
Looking ahead, the focus will be on central banks, with the European Central Bank due to report later this week. While policymakers are expected to keep rates on hold, investors will be watching closely for any signs of a possible move in June.
Overall, markets are navigating a complex mix of geopolitical risk, inflationary pressures, and slowing growth, yet, equity momentum remains steady.
DAX Forecast – Technical Analysis
The DAX has recovered from the 21,860 level (2026 low), rising above both the 50-day and 200-day SMAs to reach a high of 24,800. From here, the price has eased back, finding support around 24,000, but has failed to break the resistance at 24,400 — also coinciding with rising trendline resistance dating back to April last year.
A hold above the 200-day SMA, combined with an RSI above 50, gives buyers hope for further upside. A move above 24,400 and a break of 24,800 would create a higher high and extend the bullishness to 25,000.
XAU/USD in wait-and-see mode ahead of central bank meetings
Gold is steady at the start of the week after falling 2.5% last week, ending a four-week winning streak. The price is consolidating around $4,700 as investors take a wait-and-see approach amid ongoing US-Iran developments and ahead of a busy week of central bank meetings.
Recent developments suggest that Iran has proposed to the US to reopen the Strait of Hormuz, with nuclear talks taking place later. However, the ongoing standoff has kept oil prices high, now around $108 a barrel, raising inflation concerns and fueling expectations that central banks may hold rates longer — or tighten further.
Major central banks, including the Federal Reserve, are expected to keep rates unchanged. However, the market will be watching closely for any signals of inflationary risks. In addition to the FOMC decision, US core PCE and GDP data are due later this week.
XAU/USD Forecast – Technical Analysis
Gold continues to trade within a rising channel on the four-hour chart, although the price is currently below the 200-day SMA and testing the lower limit of the channel near $4,700, keeping the bears in charge.
With RSI below 50, sellers could break below $4,700 and then $4,650 (April 10-12 lows). A break below this level could open the door to $4,500, followed by $4,370 (late March low).
On the upside, buyers need to break above $4,800 to reclaim the 200-day SMA around $4,750 and extend profits to $4,890 (April high). A break above this level would create a high and bring $5,000 back into focus.