Contrary to the S&P 500 which is almost 15% from its previous highs, the German Dax Index is fighting to stay close to its previous highs. The German economy is growing at a much greater clip than the US and of late the Euro has has had a renewed weakness versus the good ole greenback - the weaker the Eruo, the cheaper their goods to export globally. so one could say that a stronger Euro could be a problem for the Germans. And this weak Euro seems to have kept the Dax Index from rolling over with the rest of the globe over the past year (South Korea and a few others held in as well). So what happens if the Euro finds supports and begins to climb higher? The Euro bounced off support over the past week and back over the 1.27 level. Meanwhile the Dollar index has rolled back over the 83 level as we closed up shop today giving the euro some broadbased support. Given this headwind, if the Euro were to start accelerating again to the upside, the Dax find upside gains few and far between leading to a 10% brisk fall back to the 5300 level. The 6000 level as the chart shows has always been a tough one for the index to break through. A rising Euro will help in keeping the lid down on the gains. Of course, if the Euro loses the 1.25 level, as I noted earlier this week, the story changes and the rally accelerates to the upside. Needless to say, this is a key juncture for the Dax..
No comments:
Post a Comment