edges higher as German economy shows resilience. falls despite Bessent’s plans for the economic isolation of Iran.
DAX Edges Higher as German Economy Shows Resilience
The DAX and its European peers are heading higher on Tuesday, supported by stronger-than-expected German Q2 , an improvement in IFO business sentiment and a pullback in oil prices.
German business sentiment improved notably in August, with the rising to 88.8, above the 87.2 forecast and up from 86.6 in July. Both current conditions and future expectations improved, suggesting that the recovery in confidence is gaining some momentum.
German GDP grew 0.3% quarter-on-quarter in Q2, beating expectations of 0.2%. Growth was slower than the 0.4% recorded in Q1, although the first-quarter figure was revised higher from 0.3%.
The data points to an economy that is still growing despite the difficult backdrop of high energy costs, weaker Chinese demand and U.S. tariffs. Solid exports are helping, while the latest figures suggest Germany could be weathering the energy shock from the Middle East conflict better than initially feared.
However, energy prices remain a risk as the region heads towards the winter heating season.
European natural gas prices are at their highest level since March, while EU gas storage is below 63% full, compared with a five-year average of around 80% and 76% at the same point last year.
That leaves the DAX vulnerable if energy costs rise sharply again.
DAX Forecast – Technical Analysis
The DAX trades above its rising trend line and the 50 and 200 EMAs, keeping the broader trend bullish.
The recovery from the 21,860 low ran into resistance at the record high of 26,580 before easing back towards 26,225.
Buyers will look to reclaim 26,500 and break above 26,580 to create fresh record highs, bringing 27,000 into focus.
On the downside, support is seen at 25,920, the August 20 low and July high. A break below here would weaken the near-term uptrend and expose the 50 EMA around 25,590, followed by the rising trend line and horizontal support.
Below this area, 25,000 comes into focus.
Oil Falls Despite Bessent’s Plans for the Economic Isolation of Iran
Oil prices are falling on Tuesday, extending yesterday’s 2% decline, with below $90 a barrel and WTI below $85 despite the U.S. moving to increase economic pressure on Iran.
Treasury Secretary Scott Bessent announced new sanctions on Iran on Monday, with the Trump administration threatening secondary sanctions against companies and countries helping to keep the Iranian economy afloat.
So far, the oil market has largely shrugged off the announcement. That suggests traders either expect the measures to have limited immediate impact on supply or believe diplomatic efforts could prevent them from being fully implemented.
China is particularly important because it remains a major buyer of Iranian energy. The market will therefore be watching whether Washington is prepared to risk further tensions with Beijing over enforcement of the sanctions.
There are also signs of potential diplomatic progress. Pakistan’s Interior Minister said that significant progress had been made in the latest round of talks aimed at restoring the memorandum of understanding between Iran and the U.S.
If those talks gain traction, the sanctions announced by Bessent may ultimately have less impact than initially feared.
However, the oil market is likely to need something more tangible before pricing in a sustained decline. A meaningful increase in tanker traffic through the Strait of Hormuz would be a much clearer signal that supply risks are easing.
Equally, a significant escalation in tensions or further disruption to shipping would put renewed upward pressure on crude.
Oil Forecast – Technical Analysis
Oil remains within a symmetrical triangle pattern after recently running into resistance around $88, the falling trend line.
The price has since eased back but remains above the 50 EMA.
Buyers need to break above $88 and the falling trend line, as well as the 50% Fibonacci retracement of the $55-$120 move. A breakout would bring $95, the 38.2% Fibonacci retracement, into focus ahead of $100.
On the downside, immediate support is around the 50 EMA at $82. A break below here would expose $80, the 61.8% Fibonacci retracement and the 200 EMA.
Below $75, the August low, would create a lower low and turn attention towards the rising trend line around $70.
