DAX and Oil Prices Under Pressure Ahead of ECB Rate Decision

The European market and US indices faced pressure this week due to rising oil prices and elevated bond yields, which negatively impacted risk appetite. The German DAX will be in focus as the ECB's rate decision is scheduled for Thursday, with a likely hike expected to combat re-accelerating inflation caused by energy price increases.

The crude oil forecast remains tilted to the upside amid US-Iran tensions, with WTI closing in on $95 per barrel and Brent near the key $100 level. The conflict in the Middle East continues to worry investors about supply disruptions and their subsequent impact on inflation.

A sustained rise in oil prices could risk reversing progress on inflation that policymakers have been relying on to justify lower interest rates, while simultaneously squeezing consumers and businesses.