• Trader Tai

ECB Wiping Gains of the DAX 30

From the last ECB meeting we have seen losses on the DAX 30 as well as the Euro Stoxx 50 and this week the selling continues as the euro runs red.

Today we have seen a tremendous loss in the DAX 30, around 3% and been wiped of, this was a continuation from last weeks sell of which started from the ECB meeting from disagreements with the proposed stimulus.

There wasn't much change in policy at the last meeting, there was a slight revision on its inflation guidance to better reflect the situation in Europe, the ECB removed the old inflation framework the '2% inflation target' to keep interest rates lower for longer.

A new measure in tolerance for inflation that is 'too high or too low' will be removed and the 2% ceiling / resistance will now be open to tolerance as we are seeing today.

Will the new framework that seems to be happening globally is to let inflation run high but keep interest rates low, less calls for policy tightening, example tapering or reducing central banks bond buying. The govt will keep selling bonds but interest rates are still kept low, a win win for the govt.

The ECB has come off hawkish, from the price pressure continue to rise, which could push the DAX 30 lower

Euro Bund - Weekly Analysis

Euro Bund - Daily Analysis

The euro bunds have been buying at a fast pace and so far no intention for the ECB to cut bund buying.

On the weekly view there could be a potential distribution, as a possible deploy if things do start looking up in the euro, else we could be looking at a reaccumulation, I have placed a supply zone on the daily that is still fresh.

10Y German Bund Yields - Daily outlook

The 10 year German bund yields have been falling very sharply as investors are buying up the German bunds, giving it a safer investment compared to taking risker investments, looking over the yield markets most have been selling off, I would say that's giving up a risk off sentiment for investors at the moment.

DAX - Monthly Analysis

DAX - Weekly Analysis

DAX - Daily Analysis

Looking at the DAX we can see a strong sell, a potential pull back to buy at lower prices, I would like to buy at the demand zone giving me a strong buying potential to go long on the DAX, but that's if the selling pressure continues for the DAX we could get a turn around at the next ECB meeting on the 22 July 2021 with a monetary policy statement and press conference, The EUR will be highly volatile ahead of the press meeting as there also is the ECB interest rate decision before hand.

Trader Tai


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