ECB Rate Hike Looms as Oil Prices Reach New Heights

The European Central Bank (ECB) is set to raise interest rates for a second time this year, taking the deposit rate to 2.5% from 2.25%. This decision comes as inflation in the eurozone reached 3.3% in August, with energy inflation surging 14.3%. Oil prices remain above $100 a barrel due to ongoing tensions between the US and Iran.

With the rate hike fully priced in, investors will be focusing on staff projections for growth and inflation, as well as ECB President Christine Lagarde's press conference for insight into the bank's plans for further hikes. A hawkish tone from the ECB could weigh on European equities, particularly with elevated bond yields already tightening financial conditions.

The DAX index has been moving cautiously, forming a double-top reversal before breaking below its rising trend line and 50 EMA. Bears will be looking to break below 25,400 to expose the 100 EMA at 25,300, while bulls need to retake the 50 EMA and the horizontal support/resistance around 25,200.

Meanwhile, oil prices continue to surge due to supply concerns, with Brent reaching a high of $103.50 and WTI settling above $96. Shipping disruptions across the Strait of Hormuz have fallen below 2 million barrels a day, further amplifying supply concerns.