DAX index continues to trade near its record highs

Germany’s DAX index continues to trade in a bull market, and as long the DAX is above 15,000 points, there is no risk of the positive trend reversal. The European Central Bank left its monetary policy unchanged last week and upwardly revised its growth and inflation forecasts for 2021 and 2022 year.

The growth forecast was revised to 4.6% for this year and to 4.7% for the next one, while Christine Lagarde said that it is too early to discuss tapering. The ECB’s President Christine Lagarde said that the EU economy is still recovering, and the ultra-loose monetary policy would remain in place to avoid spikes in borrowing costs.

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The European Union will publish its May inflation figures next week, and it is important to say the ECB does not expect inflation to reach 2% soon.

“Price pressures remain subdued in Europe. Even after its upwards revisions to the inflation forecasts, the ECB does not expect inflation to reach 2% within its projection horizon,” analysts at BCA Research wrote in a note.

Reopening optimism has also pushed stock markets, and European stocks extended gains for the sixth session on Friday.

German data published in the last few days were mixed, and the pace of recovery is still behind the desired levels. Industrial production in the country contracted 1% in April, factory orders were down 0.2%, but Barclays expects a rebound for the German economy in Q3 2021.

The ZEW Survey showed that Economic Sentiment was down to 79.8 in June and the main reason for this was the third wave of coronavirus. Economic sentiment contracted as another coronavirus wave weighed on local businesses while the policymakers believe that the worst has been avoided.

The Consumer Price Index in Germany increased 0.50 percent in May, and according to Bundesbank, inflation could rise faster than currently expected. The German central bank expects that the German economy could grow 3.7% this year and reach pre-pandemic levels before the third quarter.

“The German economy is overcoming the pandemic-related crisis,” said Bundesbank President Jens Weidmann.

Technical analysis: 15,000 points now represent a powerful support level

DAX index continues to trade near its record highs, and if the price jumps above 15,700 points, the next target could be around 15,800 or even 16,000. It is important to say that 15,000 points now represent a powerful support level, and as long the price is above this support, there is no indication of the positive trend reversal.

Summary

Germanys DAX index continues to trade in a bull market supported by news that the German central bank expects that the economy could grow 3.7% this year. DAX index is trading less than three hundred points below 16,000 resistance currently, and as long the DAX is above 15,000 points, there is no risk of the positive trend reversal.