Dax Index Still in Limbo as Headwinds Pile Up

Summary:

The Dax index was higher by around 0.25% on Tuesday as traders keep an optimistic frame of mind but the risks are piling up for the stock indices.

The Dax index was higher by around 0.25% on Tuesday as traders keep an optimistic frame of mind but the risks are piling up for the stock indices.

This week we saw Germany extend their lockdown into January 10th, whilst the U.K. is following by moving 60% of England into the strictest rules by Wednesday. More worrying is that the U.K. is reporting a new strain of the virus that is apparently more contagious. This has potential to spread to Europe and could see an extension to travel bans and further economic damage.

The hopes for further stimulus are also resting on the United States after the European Central Bank underwhelmed the markets last week with more bond-buying, which has failed to tackle the higher Euro and the deflationary environment. Add to this we have the growing risk of a No Deal Brexit and you have to wonder if the Dax is just inching higher on automated trading, while big investors wait for a real change in fundamentals. For now, the risks outweigh the rewards of going long stocks.

Dax Index Technical Outlook

The Dax index is still hovering around the same area under the 13,315 reistance that has held for two weeks. The index needs a catalyst to get above here and target the 13,800 and the longer that takes, the more chance we could see a pullback. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.