DAX Index Daily Fundamental Forecast – February 16, 2018

The DAX index continues to trade in a low and slow manner for much of the last 24 hours though the other stock indices around the world continue to move higher during this period. The index has been finding it difficult to string together a period of strength and the bullish undertone has been unable to translate itself into a large move higher at this point of time.

DAX Turns Choppy

A part of this is due to the fact that the index has been under pressure due to the rising value of the euro. The euro has been buoyed by continued strong incoming data from the Eurozone and also the weakness of the dollar and this has led to the anticipation of a quick end to the QE and also the market is looking forward to rate hikes from the ECB in the coming year of 2019 as well. It is quite ironical that strong data should mean a breakdown of the stock indices but thats what we are fearing.

The market fears that an end to the QE would mean that the funds that have been supplied to the stock markets would begin to dry up and this would affect the buy side in these markets and that is why we are seeing the investors a bit apprehensive to buy at the current levels. We believe that this is likely to keep the index under pressure in the medium term as the effect of the tapering of the QE would begin to percolate through the markets.

Looking ahead to the rest of the day, we expect the DAX to continue to hold steady as it would be in a quandary to decide on whether to rise or not to rise. On the one hand, the rise in the risk sentiment around the world would favor the index to push higher while on the other hand, the pressure from the rising euro would pressure the markets as a whole.