DAX Index in Focus as Volatility Dips – Calm Before a Storm?

The DAX index is wavering in the futures market as traders digest the impasse over EU funding, Brexit, and the rising coronavirus cases in Germany. The index, which is made up of the biggest 30 companies in Germany, is trading at €13,080 after it fell by more than 0.80% yesterday.

A key driver for the DAX is that EU leaders were unable to convince Poland and Hungary about the budget. The two countries have vowed to veto the funding deal over a law and order clause. A deal would be beneficial for companies that make up the German DAX index.

At the same time, investors are eying Brexit talks after the two sides postponed the negotiations after new Covid infections. Again, a deal would be positive for German companies because it would mean more trade.

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Finally, the number of new infections in Germany bounced back yesterday, rising to more than 22k. The situation could get worse as anti-lockdown protests intensify.

Daimler will be a key company to watch today after the company unveiled a new S-Class Maybach.

DAX index technical outlook

On the hourly chart, we see that the DAX index has been in a tight range recently. As a result, the price remains at the same level as the 14-day moving average while its volatility, as measured by the Average True Range (ATR) has dropped to the lowest level since September. Therefore, for today, I expect that the index will remain at the current range, with the key support and resistance levels being at €13,025 and €13,210.

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DAX Index Hourly Chart

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