DAX Index Daily Fundamental Forecast – January 23, 2018

The DAX index had another strong day yesterday, at the end of which, it was able to finish the day above the 13500 region though it does not seem to have had a strong break through this region as yet. But the fact that the index has managed to close near the highs should give some more encouragement for the bulls for the new day ahead and it all points to some interesting days ahead.

DAX Shoots Higher

The DAX has been buoyed by the general improvement in risk sentiment across the globe which has sent the leading stock exchanges in the US and other parts of Europe spiralling higher. The European stock exchanges have also been buoyed by the anticipation that the ECB would tone down their expectations of when the QE would end. They do not want to ruffle the markets by promising anything and crashing the markets and would want the traders to gradually digest the facts. The fact that the QE would end by the close of the year is well known but the ECB would want the reaction of the market to be gradual.

Also, the index has been driven higher by the progress in the coalition talks in Germany. After having hit a roadblock last week, this week Merkel seems to be close to achieving the coalition and the announcement of the deal should come in anytime now. If that happens, that would be a further boost for the German economy and the political scene as well as it would remove the uncertainty and bring in continuity.

Looking ahead to the rest of the day, we do not have any major news from the Eurozone but we have the economic sentiment data from Germany which should have minimal impact on the index. We should see the index continue to move higher in the short term in anticipation of the coalition being formed in the short term.