DAX index continues to trade above 15,000 support, but further turmoil should not be discounted despite this. Concerns over the pace of vaccination campaigns in some European countries represent a big problem and leaves little hope for the full reopening of economic activities in the upcoming weeks.
Last week, Germany reported the April ZEW survey, which showed that economic sentiment contracted as another coronavirus wave weighed on local businesses.
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The ECB’s President Christine Lagarde said that the EU economy is still suffering, and the European Central Bank will continue with fiscal stimulus until the economy fully recovers. Christine Lagarde said that the US fiscal response to the pandemic also positively influences European growth.
Despite the slow vaccination process, many European countries will be able to lift some of the restrictions in the summer, and it seems that the worst has been avoided. It is also important to mention that inflation figures for March met expectations in Germany and the EU.
“The eurozone annual inflation rate rose to 1.3% in March, compared with 0.9% in the two previous months and a deflationary second half of 2020. Across the wider European Union, prices climbed to 1.7% in March from 1.3% in the previous month and 1.2% a year earlier,” Eurostat data showed.
The EU seasonally adjusted Trade Balance posted a surplus of €18.4billion, and the policymakers said that the EU is moving in the right direction, but the pace of recovery is still behind the desired levels. The ECB will have a monetary policy meeting on Thursday, and according to estimates, the European Central Bank will keep its monetary policy unchanged.
The degree of ECB’s concern about the economic situation will significantly influence stock markets in the near term, and for now, everything indicates that growth forecasts will likely be downwardly revised.
Technical analysis: DAX index continues to trade in a buy zone
DAX index advanced to its record highs on Friday, and if the price jumps above 15,500 points, the next target could be around 15,700 or even 16,000. It is important to say that 14,000 points now represent a powerful support level, and as long the price is above this support, there is no indication of the trend reversal.
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The German Dax has advanced to its record highs on Friday, but further turmoil should not be discounted despite this. This index continues to trade in a bull market, but if the price falls below 14,000 points, it would be a strong “sell” signal. The degree of ECB’s concern about the economic situation will significantly influence stock markets in the near term, and for now, everything indicates that growth forecasts will likely be downwardly revised.