DAX Continues Decline on Hawkish ECB and U.S. Market Correction

The ECB press statement was overall hawkish warning of persistent inflation and uncertain economic performance.

Written by: Gino Bruno D'Alessio • Friday, July 19, 2024 • 1 min read

• Last updated: Friday, July 19, 2024

The ECB press statement was overall hawkish warning of persistent inflation and uncertain economic performance.

The Eurozone central bank kept interest rates on hold, as the market had widely expected. No real news from the event. What was more interesting was the forward guidance made in the post-meeting press statement.

The ECB president Lagarde said that inflation remains persistently high, and that the ECB will maintain rates high as long as necessary. She also mentioned the usual comment to act on data, an approach based on the inflation outlook.

Lagarde also mentioned a weaker economic outlook with slower expansion in the second quarter compared to the first quarter. Overall, the ECB expects muted growth for 2024 amid uncertainty.

The market saw little reason to react to the press conference, gaining just 0.2% in the first half hour after the Lagarde started her speech. However, the DAX turned south after the U.S. open following the major New Stock indices lower.

Technical View

The day chart below for DAX shows a market still in a bullish trend undergoing a severe correction. Today’s candle has found support on the belly of the Ichimoku cloud at 18,166. To consider the bull trend back in action we need to see the market rise above the cloud.

That alone would not be enough, the latest attempt to rally higher failed at 18,785 (blue line), from there the market turned back down again. So, we would also need the market to close above the blue line, and then continue past its all-time high of 18,913 (red line) for confirmation of the trend.

To the downside the initial support remains at the bottom of the cloud. Should that break the next support is at the previous low of 17,939 (green line).

DAX

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ABOUT THE AUTHOR See More

Gino Bruno D'Alessio

Gino D’Alessio is a professional Forex trader with 20+ years of experience in the financial markets as a broker-dealer. Having worked in New York and London, Gino is regularly featured on Seeking Alpha. He completed the CAIA program in 2015, which also gave great insight into global macro factors. His main focus is FX majors, indices and commodities.