The DAX staged a strong recovery yesterday as the index rose by around 100 points during the course of the day but then corrected a bit towards the end of the day on profit taking and ended the day below 12450. This is a strong showing from the DAX index but it is also something that was always expected. We had mentioned this in our forecast yesterday where we had said that the index is likely to stage a recovery back towards the broken support around the 12550 region and we would like to look at the recovery yesterday as part of this overall correction.
DAX Rises Strongly On Robust PMI
The recovery yesterday in the DAX was brought about by the Manufacturing PMI data from Germany which came in better than expectations at 59.6 and this helped to give a boost to the DAX. Germany has always known to be a very strong manufacturing hub as far as Europe is concerned and the strong data from there should be no surprise and is only a continuation of the trend of strong data from the country.
Germany continues to be the engine behind the Eurozone and any strong data from Germany would also help to build the Eurozone economy overall and this data should cheer up the Euro leaders and the ECB as it continues the trend of good data from the Eurozone and helps the ECB to start thinking about tapering pretty soon. We expect the DAX to open slightly stronger today as well but with the index having broken through the strong support region at 12550 yesterday, it is going to be a very difficult task to get above it at any point in the near future.
Looking ahead to the rest of the day, we do not have any major economic news from Germany and so we can safely expect the DAX index to open strongly for the day, to continue from where it left off yesterday, and consolidate and move higher during the course of the day.
This article was originally posted on FX Empire