DAX Index Forecast – Markets Under Risk Off Mode

The markets have been under a lot of pressure since the morning as fears of a trade war continue to dominate the market headlines over the last couple of days. To be fair, this risk has been in existence in the market for several weeks now but it ratchets up and down depending on the situation and the developments on each day.

DAX Under Pressure

This has placed the Asian markets under a lot of pressure and to add to the risk, we have reports that say that the US might also bring other commodities also under the new taxes which would mean that the trade war between the US and China is only likely to escalate in the coming days. This fear has gripped and hit the Asian markets the most and that is why we have been seeing them sliding lower since the morning. It is likely that this is going to affect the European markets as well, when they open and the DAX should also tag along.

The DAX index is known to be guided a lot by the market forces from all around the globe and that’s what makes it especially vulnerable. Also, if the trade war escalates, it is likely that Germany would also be drawn into it and that is going to affect the German economy in the long run. Considering all of this, we expect the index to come under pressure and this would mark the reversal of the move through the 13000 region that we had seen last week on the back of reports of continuation of the QE for longer than expected.

Looking ahead to the rest of the day, we have the ECB President Draghi making a speech but we do not expect his speech to rock the markets. So we believe that the index would start under a lot of pressure but that is likely to be used as an opportunity for bottom fishing for many of the large traders and investors.