The DAX index finally managed to break through higher over the highs of its range. This was the first breakout in several days and it augurs well for the future as far as the bulls are concerned. This is something that the traders have been looking out for and considering the fact that the index has been trading nears the range highs over several days, it only needed a small trigger for the index to be pushed higher.
DAX Likely to Continue Higher
That trigger came from the ECB which had to bow down to the way the incoming data was setting up. The ECB had sounded hawkish a few months back on the back of strong incoming data and this increased the anticipation that the QE would be tapered and ended by the close of this year with the possibility of a rate hike beginning towards the start of next year. But the data has been on a downtrend over the last few months and it was time that the ECB acknowledged that.
Though the ECB did not do that directly, Draghi had to point out to the weakness in the economy and this was indication enough for the markets that the QE was going to get dragged on further. This has spurred the DAX higher and we have seen the breakout yesterday and what should give some heart to the bulls is the fact that they were able to hold on to their gains to close for the day over the highs of the range and this points to further gains in the short and medium term as well. The index had fallen on anticipation of an end to the QE but now that the tapering is going to get delayed, we are likely to see a reversal.
Looking ahead to the rest of the day, we have the CPI flash estimate from the Eurozone region and if this comes out weaker, ironically, this is going to spur the index higher even more. The global stock markets are under a bit of pressure this morning and that could also have an effect on the DAX.