The DAX dipped lower yesterday towards the 13000 region but recovered towards the end of the day under choppy trading conditions that were seen all across the markets yesterday. The stock markets have been under pressure ever since the news came in that the tax cut plans for the corporates in the US would be delayed by a year and the indices around the world have been dropping lower under this impact.
DAX Threatens to Break the Floor
This has led the DAX index lower as well as it finally shows some corelation with the other major stock markets around the world. The DAX was put under further pressure as the WPI data from Germany came in much lesser than expectations. It is quite rare for the incoming data from Germany to slip expectations and it is for this reason, among others, that Germany is considered as the engine of the Eurozone. This bad data further weakened the DAX index which then moved towards the 13000 region.
But it managed to find some strong support in that region which helped the index to bounce quickly and in a strong manner which then helped the index to close above the 13100 region. The DAX, as with other stock markets, are bound to remain under pressure over the next few days but we continue to believe that the overall trend is still up and this move down is only a correction and that the index would begin its next bullish leg within a short period of time.
Looking ahead to the rest of the day, we have the ZEW economic expectations from Germany and we also have the ECB President Draghi making a speech. It remains to be seen whether he will touch upon monetary policy but trades will have a close eye on the 13000 region as a break of that region could turn the situation dangerous for the DAX bulls.
This article was originally posted on FX Empire
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