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DAX Index Recovers After a Large Fall

The DAX index has rallied higher over the last couple of days and it closed the week in a strong manner which should give hope for the bulls. The index has simply refused to be cowed down by the uncertainty that seems to be gripping the Eurozone markets and the risk factors that seem to be dominating the headlines.

DAX Still In Range

There has been an increased sense of risk in the global markets as the threat of a trade war between the large global players has refused to go away. The G-7 meeting only sought to underline this fact with the US trying to form its own line and refusing to get along with the other partners in the G-7. This has only served to heighten the risk in the markets and the effect of that will be known only in the coming days. We are seeing the likelihood that other countries like Canada might choose to go their own way and impose tariffs.

DAX Hourly
DAX Hourly

This would be viewed as a tit for tat measure and this was something that the major countries would not want as a trade war breaking out would not be good for anyone. But this seems to be a distinct possibility at this point of time. There has not been much impact of this on the markets around the world as of this morning but it is unlikely to remain oblivious of such developments in the medium term.

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We believe that the DAX has been able to survive this only due to its own strength and the strength of the German economy which continues to remain stable and well grounded in the manufacturing sector. Looking ahead for the day, we seem to be locked in a 500-point range for now and this should keep the traders, especially the short term ones, quite busy for now. We will have to wait and see the developments in the coming days as the price action remains choppy for now.

This article was originally posted on FX Empire

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