DAX Index Daily Fundamental Forecast – July 25, 2017

The DAX index corrected further yesterday and for a brief while, it seemed as though the index would be totally routed as it dipped below the 12200 support mark. But some strong buying later in the day helped it to recover above the 1220 mark by the end of the day and this has helped to provide some boost to the bulls though it is likely to be only a temporary relief as far as the bulls are concerned.

DAX In Jittery Mode

It is in line with the general weakness in the European stock markets which we have been seeing over the past few days ever since the news of tapering from the ECB began to spread in the markets. The economic data from the Eurozone over the last couple of weeks has also not been very encouraging and with the tapering expected to begin sometime in October, the buyers and the sellers are faced with risk and uncertainty on what could happen in such a situation and hence they have begun to bail out from the stock markets.

Over the last few years, they have got so used to QE and to funds being pumped into the system by the ECB, that the traders have become jittery on threats of tapering as they do not know what to expect. The ECB has been trying to be dovish and trying to manage the expectations of the market but they have not been able to stop the euro from appreciating and the stock markets from falling. This has been the case over the last few weeks and this choppy trading, with a clear bearish bias, is likely to last in the short and medium term.

Looking ahead to the rest of the day, we do not have any major news from the Eurozone or Germany for today and so expect some consolidation on either side of 12200 during the course of the day.