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Date: 19th February 2025.

Is the DAX Overbought After Rising For 7 Weeks Straight?


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The DAX rose by 20% in 2024, however, in 2025 so far the DAX has risen more than 15% in only 50 days. The DAX has risen for seven straight weeks, driven by rate cuts and strong earnings reports. Can the DAX maintain momentum or is the price overbought?

DAX 40 - What’s Driving the Bullish Trend?

Three factors are driving the price of the DAX higher. The first is the European Central Bank which has cut for 2 consecutive months and is likely to adjust a further 0.75% in 2025. The lower interest rates and expectations of further cuts are known to support the DAX due to higher consumer demand.



The second factor driving prices higher are the positive earnings data. SAP SE is the most influential stock and has risen by 18% so far this year. SAP’s latest quarterly earnings report saw the company beat revenue expectations by 2.60% and earnings by 1.40%. The second most influential stock for the DAX is Siemens AG which has risen almost 20% in 2025 so far. All of the seven most influential stocks have risen in value this year so far and only 17% of the whole DAX have declined this year so far. However, traders should note that not all companies within the DAX have made public their quarterly earnings reports.

The third factor is the expectation that the Ukraine-Russia conflict will end or reach a ceasefire in the first half of the year. Traders should note that an end to the conflict is more crucial for European indices in comparison to Asian or US indices. This is due to the nature of Europe and European geopolitics.

Is the German DAX Overbought?

When analyzing the price movement the index is trading in the overbought zone on most oscillators and on most timeframes. However, price action and previous impulse waves indicate the price will not be overbought unless the price increases above 23,250EUR. However, the intrinsic value of the DAX will also depend on US tariffs.

If Germany is able to avoid harsh US tariffs, German stocks may continue to increase higher as sentiment improves. However, harsh tariffs are likely to apply downward pressure on the index and increase the likelihood of being overbought in the short-to-medium term.

If the price indeed declines, traders may first target the support level at $22,437.58, which will likely fall in line with the 75-period Moving Average. The main bullish breakout point is at the 22,724.30 mark.

Tariffs on Foreign Cars

A key risk for the DAX as mentioned above is US tariffs, particularly on cars. The DAX index includes Mercedes-Benz, Porsche AG, BMW, and Volkswagen. Total new cars sales in the US from these 4 companies make up almost 10% of the overall sales.



Donald Trump remained defiant despite warnings that his proposed trade war could disrupt the US economy, stating that his administration might impose tariffs of approximately 25% on foreign cars within weeks. He also announced that semiconductor chips and pharmaceuticals would soon face higher tariffs, speaking at a news conference on Tuesday.

Key Takeaway Points:

* The DAX has surged over 15% in 2025, driven by ECB rate cuts, strong earnings, and optimism over the Ukraine conflict.
* SAP SE and Siemens AG are the top-performing stocks and 83% of the DAX has witnessed gains. However, some earnings reports are still pending.
* Despite trading in overbought territory, the index may continue rising unless it faces harsh US tariffs.
* Potential US tariffs on foreign cars pose a key risk, impacting major DAX-listed car makers. This includes Mercedes-Benz, Porsche AG, BMW, and Volkswagen.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Date: 20th February 2025.

The Yen Continues To Rebound, Investors Boost Bets Of Rate Hikes


Trading Leveraged products is Risky

The Japanese Yen significantly increases in value against all currencies and the JPY Index is trading at a 2-month high. The primary factor supporting the Japanese Yen is the growing expectation of the Bank of Japan raising interest rates, along with its safe-haven appeal.

Will the JPY be the best-performing currency of 2025?

DAX 40 - What’s Driving the Bullish Trend?

The Japanese Yen is the best-performing currency of the year increasing by 4.20% so far. The second best-performing currency is the Australian Dollar which has risen 2.83% and the New Zealand Dollar which is up 2.20%. Here we can see the momentum of the JPY in 2025.

The main supporting factors are the Bank of Japan’s interest rate hikes, expectations of further hikes and the currency’s safe haven characteristics. Investors were also quick to consider increasing their exposure to the Japanese Yen as the currency was trading at a price 33% lower than in 2022.

The Bank of Japan over the past months has taken interest rates to a 17-year high. Currently, investors believe the Bank of Japan will adjust its main rate by a further 50 basis points to 1.00%. This would take the BoJ’s rate to the highest since 1995. Meanwhile, this week the Bank of Japan Governor Mr Takata stated that the central bank should further increase interest rates, warning that maintaining the current levels might cause the public to become too accustomed to the risks of rising prices and accelerating inflation. The Bank of Japan’s next interest rate decision will be on March 19th.

One of the key concerns for the Bank of Japan is the country’s inflation rate which has risen to 3.6%. Inflation is currently at its highest level since January 2023. Another key influential factor is potential tariffs not only on Japan but also on the main global economies. In 2018, when tariffs were previously introduced, the Japanese Yen rose in value due to its safe haven nature. However, traders will evaluate upcoming tariffs and its domino effect on the Japanese Yen day by day.

The US Dollar and Its Risks To The Japanese Yen

The US Dollar continues to struggle in February 2025, however, fundamental factors continue to indicate the currency can rebound. Traders should note that a strong US Dollar can have a negative effect on the Japanese Yen. Market optimism is bolstered by the Senate's confirmation of financier Howard Lutnick as Secretary of Commerce. A former Cantor Fitzgerald director and supporter of Donald Trump’s trade policies, Lutnick has dismissed concerns that high tariffs fuel inflation and advocates for stronger sanctions to reduce export barriers. His appointment raises the risk of strained US trade relations.

Meanwhile, San Francisco Fed President Mary Daly emphasized the need for restrictive monetary policy until inflation slows, citing economic and labour market stability. The Federal Reserve seeks ‘further progress on inflation’ before cutting rates, according to FOMC Meeting Minutes. Some members of the committee suggested a limited need for further reductions. Meanwhile, economists advise the Federal Reserve is not likely to cut interest rates unless inflation falls to at least 2.7%.

USDJPY - Technical Analysis

The US Dollar Index is currently trading 0.16% lower ensuring there are no current conflicts while the Japanese Yen is increasing in value. In the 2-hour timeframe, the USDJPY is trading comfortably lower and below all major Moving Averages. The USDJPY is also trading below 30 on the Relative Strength Index again indicating sellers are driving the price lower.



However, traders will be cautious the price action does not change as the Asian session comes to an end. Currently, the price has retraced upwards as the close edges nearer. Bearish momentum will need to be regained in order for sell signals to again materialize. The price movement will also depend on today's US news releases.

Key Takeaway Points:

* Japanese Yen Strength – The JPY is the best-performing currency of 2025 so far, gaining 4.20%, driven by expectations of Bank of Japan (BoJ) rate hikes and its safe-haven appeal.
* Japanese Inflation - Japan’s inflation rate which has risen to 3.6%. Inflation is currently at its highest level since January 2023
* Bank of Japan's Monetary Policy – The BoJ has raised rates to a 17-year high and may hike further by 50 basis points to 1.00%, the highest level since 1995.
* US Dollar Influence – A stronger US Dollar could pressure the Yen. The Fed is maintaining a restrictive policy, and rate cuts are unlikely unless inflation falls to at least 2.7%.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.