DAX Index Daily Fundamental Forecast – August 22, 2017

The DAX index continues to trade within a tight range and this has become a common occurence over the last couple of weeks in the index. There does not seem to be any wish from any side to push the index in any specific direction and with no end in sight to this log jam, we are going to see a lot of consolidation and ranging happening in the index in the short term.

DAX In Tight Range

Of course, we are seeing a lot of volatility and movement within the range but there does not seem to be any intention to break through the range and move higher. The stalemate seems to be due to the lack of direction from the ECB as the market awaits the next move from Draghi and his team. After being hawkish in the initial part of the month, the ECB has gone quiet and has not followed up on its pronouncements as it grapples with the high euro. This is likely to continue in the short term as well.

The markets, especially those in Europe, would be looking towards the speech from Draghi at Jackson Hole later in the week to see if they can glean any specific direction that the ECB is likely to lean on, in the short term. Till that happens, we can expect this ranging to continue. With the Germany elections also coming up in the horizon, the DAX has been forced to deal with multiple pulls and pushes from different directions which has led to this state of stalemate and we do not see the index moving beyond the range with 12350 on the top and 12000 at the bottom anytime soon.

Looking ahead to the rest of the day, we have the German ZEW Economic Sentiment but this is unlikely to bring in too much volatility and so we can safely expect consolidation with a bullish bias in the DAX index for today.