Germany’s labor market and inflation data are in focus today, as these figures could influence the European Central Bank’s (ECB) policy direction ahead of its upcoming meeting. Markets are currently pricing in an 85% chance of a 25-basis-point rate hike, making the release of today’s inflation figures particularly critical. The unemployment rate is expected to hold steady at 6.4%, with a slight increase in the number of unemployed, while inflation is projected to ease to 2.8% year-over-year from 2.9%.

The implications for the financial markets are significant. A stronger-than-expected inflation reading could bolster expectations for further ECB tightening, potentially impacting the DAX index futures negatively despite recent bullish trends. The German DE40 index has shown resilience, trading near record highs, but any hawkish signals from the ECB could trigger profit-taking and test key support levels.

Market professionals should closely monitor the inflation data and its impact on ECB policy, as a decisive breakout above the 25,300 resistance zone could lead to new all-time highs for the DAX, while failure to do so may prompt a correction towards the 24,900 support level.

Source: xtb.com