DAX Index Daily Fundamental Forecast – July 20, 2017

The DAX index has been recovering slightly over the past 24 hours. This cannot be viewed as a recovery of sorts but more of a consolidation that is going on in the markets ahead of the ECB meeting that is scheduled to happen today. The DAX is likely to stay under pressure though there may be a relief rally in the short term.

DAX Likely to Make Slow Progress

All this pressure on the stock markets is mainly due to the tapering talk from the ECB and that is the reason why the ECB statement and press conference later in the day is likely to be key. The markets would be watching the conference with great interest. Though it is a given that the tapering is likely to gain ground after summer, the market would look for hints and confirmation of the same before it pushes off into any specific direction.

It is this direction that the market is likely to get today. If the ECB does not do anything to reinforce the talk of tapering, then we might see a slight disappointment in the currency markets which is likely to affect the euro and the yields and this is then likely to push the DAX back towards the key 12550 region. On the other hand, if the ECB continues to talk about tapering, then we are likely to see further weakness in the stock markets.

Looking ahead to the rest of the day today, we do not have any major news from Germany but all the focus today is likely to be on the ECB press conference later in the day. But with the tapering talk likely to continue even beyond today, any bounce in the DAX index is likely to be viewed as an opportunity to sell. Traders need to keep this in mind and not get sucked in by false moves.