DAX Index Daily Fundamental Forecast – January 24, 2018

The DAX index continued to trade in a strong manner which is beginning to become a surprise as the euro has also been rising during this period. The euro has been driven higher by the weakness in the dollar but more by the expectation that the QE would get done soon.

DAX Moves Through 13500

But this, normally, would have an opposite effect on the stock markets mainly due to the fact that once QE is stopped, then there would not be much funds for the stock markets and hence the buying pressure is expected to get lower. But, on the other hand, we are seeing the DAX index moving higher at this point of time which means that it is currently being driven by other fundamentals and the geopolitical developments as well. The index has cleanly broken above the 13500 region and has now managed to close above this region for the past 2 days.

The next focal point would be the ECB press conference that is scheduled for later in the week. The market would be waiting to see whether the ECB would try and talk down the euro as they are likely to feel uncomfortable with the increasing strength of the euro over the past few weeks and it is likely that the strength would continue as the incoming economic data continues to be strong over the last few months.

Looking ahead to the rest of the day, we have the PMI data from the Eurozone and we also have the PMI data from Germany. These are also likely to come in in a strong manner and if that happens, the index could move even higher. On the other hand, the buyers would be a bit wary about buying above the range highs so close to the ECB press conference and there is likely to be a bit of profit taking as well. This should lead to a good battle between the bulls and the bears for today.