DAX Index Daily Fundamental Forecast – April 20, 2017

The DAX index continues to consolidate below the 12000 region and it has been trading around the strong support region in 11950 where it finds itself on the back of global fears, risks and uncertainty. What specifically affects the DAX as such, in the short term, are the elections that have been called for by the UK PM in June. This is a master stroke as far as May and the UK are concerned but it is being viewed with suspicion, rightly so, by the Euro leaders.

DAX Under Pressure

The call for the quick polls is viewed as a strategy to strengthen the position of May when she and her government sits down with the Euro leaders for talks on the Brexit process. This move is seen as a ploy to force the Euro leaders to agree to her terms and extract as much traction from them as possible and she would be able to do that with a bigger and stronger mandate within the UK and thats what she is hoping for, in the election.

This pushes the Euro leaders on the backfoot and with the German elections scheduled to be held in the second half of the year, when the Brexit negotiations would be in full swing, it basically places a lot of pressure on Merkel and the Euro leaders in general to continue to remain strong to ensure that they get what they want from the UK when the talks begin. It is this fear and uncertainty that has been weighing on the DAX over the past couple of days.

Looking ahead to the rest of the day, there is not much news scheduled to be released from Germany for the day and so we can expect some more consolidation and ranging. We expect the region around 11950 to hold for the short term and lead to a bounce in the DAX but the trading is likely to be choppy.