The DAX Index is trading higher as German stocks surge higher in a show of solidarity with the stellar US May jobs report. Having received a jab in the arm from yesterday’s ECB decision to expand the PEPP by an amount that beat expectations, unexpectedly robust US Non-Farm Payrolls data added more fuel to the rally on the DAX index on Friday.
The upsurge in German stocks is a combination of not just the US jobs data of today, but at least two weeks of united, concerted action by EU governments to pull the Eurozone out of impending recession. The German-led coalition which enabled the passing of a massive economic stimulus, that culminated in the 600-billion Euro expansion of the Pandemic Emergency Purchase Program (PEPP) gave an enormous boost to investors, who have repaid these moves with huge bids on the Euro and stock markets across Europe.
The DAX index is 3.36% higher on the day and is trading at 12847.63 points, sending it to the highest close in three and a half months. Since the lows of March 2020, the DAX has undergone a robust recovery, grossing nearly 45% in returns. At present values, the DAX index has almost recovered its pre-coronavirus levels, just as the US markets are close to retaking their all-time highs of 2020.
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Technical Outlook for DAX Index
The DAX index is 10.88% higher on the week and looks set to close in the green for the 3rd week in a row. The DAX is close to testing the resistance at 12882.68, where the previous highs of 19 June 2017 and 23 July 2018 are located.
A break above this area allows the DAX index approach 13191.15 (previous highs of 4 December 2017 and 22 May 2018), with the possibility of reclaiming 13473.92 and the 2020 tops of 17 February 2020 very much on the cards.
On the flip side, rejection at the next resistance level (12882.68) could lead to a profit-taking pullback towards 12625.62. Previous resistance levels that will now function as support areas are seen at 12432.83 and 11995.83 (where the 200-day moving average rests). These could become likely targets if the pullback drags the DAX index below 12625.62.
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