DAX Index Daily Fundamental Forecast – July 21, 2017

The DAX index spent much of the day yesterday waiting for the ECB. The DAX has been weak over the past few days on the talk of tapering by the ECB and with it, came the fear that the ECB would start funding the flow in the markets and this would lead to the drying up of buyers. So, the bigger investors and traders have been pulling out of the markets over the last few days and the DAX has also been choppy but decidedly weak during this time as it deals with this eventuality.

Though there has been some talk that the ECB may not go for tapering at all, the incoming data and the other signals are strong enough to suggest that all this talk would not come to fruition. It was in this background that Draghi sought to sound as bearish as possible yesterday. He made a dovish speech but that failed to inspire the DAX to make any kind of move.

DAX Fails to be Enthused by ECB

In fact, so dovish was he that it looked as though he was simply trying too hard to talk down the euro and the talk of tapering. The more he spoke, he more it became obvious that tapering was just around the corner. This became clear during the course of his speech and the effect of that was seen on the DAX which closed lower for the day. It was not inspired by his dovish speech and the investors who would have expected a rally in the DAX index following his speech were largely disappointed by his speech and began to sell off after the end of the speech.

That effect is likely to continue for today as well though the US stock markets closed strongly for the day yesterday. So, we can expect a pretty strong opening for the DAX today which is likely to get progressively weaker during the course of the day as it settles down for some ranging and consolidation.