DAX Index Consolidates as It Awaits the ECB

The DAX index continues to trade near the highs of its range but as we had mentioned in our forecast on Friday and over the weekend, there has been a bit of a correction so far as the US stock indices fell hard on Friday and the effects of that are being felt in the DAX.

DAX Under Pressure

Also, we have been talking about the impending correction due to the fact that the index is now trading near the highs and it is only natural that the index corrects a bit as the traders begin to take profit and wait for the index to move lower so that they can buy it back again at lesser prices. Also, looking ahead for the week, we have the ECB meeting which is likely to have an impact on the prices in the short term as the market awaits the ECB.

There has been a bit of uncertainty surrounding the tapering and the ending of the QE. The incoming data has been getting progressively weaker over the last few weeks and it is now looking as though the ECB would be looking to delay the tapering so that the economy can pick up once again. This would mean that the ECB cannot be as hawkish as it had been last month but it remains to be seen how the ECB would actually respond when they have the meeting and the announcement that is likely to follow.

Looking ahead to the rest of the day, we expect the index to continue to be under pressure for the day or atleast till the US stock markets open and then the index is expected to be driven by how the US stock indices respond for the developments that have happened over the weekend. We do not expect too much of an impact on the DAX for now.