The DAX price has recovered significantly over the past two sessions and has wiped out most of its recent losses. After sinking to a low of 15128 on 19 July, it is now up to an impressive 15663 or a 4% increase over the past five sessions. The recent speech by IMF Chair Christine Lagard definitely had a positive uplift for the DAX price.
It seems that the DAX price is poised to start attacking the 16000 levels again as the German economy continues to open up. Several factors could affect this bullish sentiment however, such as another rise in Covid19 cases due to the Delta variant. The recent catastrophic floods in Southern Germany have also had a negative economic effect.
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Short Term Forecast For DAX Price: Looking bullish overall
Although there is still considerable economic uncertainty across the EU, it looks like the short-term prediction for the DAX remains bullish. The 4.5% rise across the past four sessions is pretty good and positive investor sentiment seems to have returned to the forex markets.
Initially, it was thought that ECB boss Christine Lagarde’s speech would have a negative effect on European markets. That was definitely not the case with the DAX rising considerably in today’s session.
The same could not be said for the American exchanges which saw some drops. Jobs data was definitely not encouraging with a faster than expected rise for those claiming unemployment. There was a sharp increase to 419,000 Americans claiming unemployment with forecasts being a drop to 350,000.
The DAX appears well primed to begin attacking the 16,000 mark next week. Although Covid19 rises are rising in Germany as a whole, the economy seems to be continually opening up. Retail data has shown a boost over the past month and the Frankfurt bourse is showing a significant move to positive territory.
Long Term Forecast for Frankfurt Exchange – More Support from ECB
Lagarde’s speech showed that the ECB is expected to continue sticking to its zero-interest-rate policy for the foreseeable future. She also indicated that the ultra-lose monetary policy will continue for the rest of the year at least.
“Our key interest rates have been close to their lower levels for some time, and the medium-term outlook for inflation is still well below our target,” Lagarde said.
This means that for the next few months at least, the ECB intends to continue supporting the economy. This will be done through an expansionist monetary policy. It also looks likely that the emergency purchasing program for government bonds and corporate securities will continue till at least March 2022.
All these moves by the ECB will undoubtedly have a positive effect on the DAX price long term. In fact, it is expected to reach the 18000 level by the end of the year.
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Gerald Fenech
