An improving housing market could fuel consumer confidence, spending, and demand-driven inflation. According to the CME FedWatch Tool, the chances of a 25-basis point June Fed rate cut decreased from 55.2% to 50.7%.

10-year US Treasury yields increased by 0.32%, ending the day at 4.324%. However, the US markets ignored rising yields and falling bets on an H1 2024 Fed rate cut. On Monday, the Dow ended the day up 0.20%. The Nasdaq Composite and S&P 500 saw gains of 0.82% and 0.63%, respectively.

The Monday Market Movers

Auto stocks were among the front runners. Porsche rallied 2.26%, with Volkswagen gaining 1.44%. Mercedes Benz Group and BMW ended the session up 0.36% and 0.28%, respectively.

Vonovia recovered some of the losses from Friday, gaining 3.13%. The German real estate firm reported its largest-ever loss in 2023, sending the share price down 10.07% on Friday.

Tech stocks also limited the downside. Infineon Technologies and SAP ended the day up 0.28% and 0.17%, respectively.

However, Adidas slid by 2.39%, with bank stocks ending the session in negative territory. Commerzbank and Deutsche Bank declined by 0.38% and 0.90%, respectively.

German and Eurozone Economic Sentiment in the Spotlight

On Tuesday, ZEW Economic Sentiment figures for Germany and the Eurozone need investor consideration. Improving sentiment toward the German and Eurozone economies could support demand for DAX-listed stocks.

Economists forecast the German ZEW Economic Sentiment Index to rise from 19.9 to 20.5 in March. Moreover, economists predict the Eurozone ZEW Economic Sentiment Index to increase from 25.0 to 28.0 in March.

Beyond the numbers, ECB commentary also warrants investor attention. ECB Executive Board member Luis de Guindos is on the calendar to speak. Views on inflation, the economic outlook, and the timeline for an ECB rate cut would move the dial. The markets are betting on a June ECB rate cut.

US Economic Calendar: US Housing Sector in the Spotlight

On Tuesday, US housing sector data will garner investor attention. Building permits and housing start numbers for February could influence sentiment toward the US economy. Economists consider the housing sector a leading indicator of the US economy.

Economists forecast building permits to decline by 0.2% and housing starts to increase by 7%. In January, building permits and housing starts fell by 0.3% and 14.8%, respectively.

Short-term Forecast

Near-term trends for the DAX will hinge on euro area economic indicators and the Fed interest rate decision.

Better-than-expected euro area data could drive buyer demand for DAX-listed stocks. However, a less dovish Fed rate path could pressure riskier assets.

In the futures, the DAX and Nasdaq mini were down 47 and 43 points, respectively.

DAX Technical Indicators

Daily Chart

The DAX hovered well above the 50-day and 200-day EMAs, sending bullish price signals.

A breakout from the March 14 all-time high of 18,039 could support a move toward the 18,200 level.

Economic data from the euro area, ECB chatter, and US housing sector data need investor consideration.

However, a fall through the 17,900 handle could give the bears a run at the 17,750 handle.

The 14-day RSI at 74.47 shows the DAX in overbought territory. Selling pressure could intensify at the March 14 high of 18,039.