DAX Index Daily Fundamental Forecast – July 3, 2017

The DAX index, as expected, moved lower on Friday on weak global cues and this is likely to last for the short term. The stock markets all around the world are on the backfoot with the currencies on the upswing and this is likely to affect the DAX and the other stock markets. On Friday, we saw the DAX move lower into the 12300 region and though it did recover a bit towards the close, the writing on the wall is clear.

DAX On the Backfoot

We had warned of this move quite sometime back as the DAX was struggling to push on towards 13000. We had felt that, considering the momentum that the index had at the beginning of the year, it would easily breeze through the 13000 mark but it struggled in that region for several weeks and this led to doubts on whether it would be able to push through at all. We had warned of the bulls getting tired in due course of time and giving away by taking the profit and walking off and this has happened over the last week as the stock markets have come under great pressure.

We have seen the DAX fall through the crucial 12550 support region over the last week and the weak close for the week also indicates further pain this week as well. The stock markets are struggling as the ECB, BOE and the BOC have hinted at a reversal of their rate policy and this has made the investors and the traders pull off some of their funds from the stock markets and invest them into the bonds and currencies in the hope of better yields. Some of the funds are likely to come back into the stock markets and that is why we do not foresee a total rout in the stock markets.

Looking ahead to the rest of the day, we do not have any major data from Germany and so we can safely expect some consolidation with a positive bias today as the DAX index looks to recover and bounce back towards the broken support at 12550.