DAX shows resilience

The German market has shrugged off fears for the EU and continues to head higher.

The fact that the US Federal Reserve has not started tapering has arguably been most easily observed in the performance of the DAX. The need for equity markets to be propped up, or at the very least have the security of constant cash finding its way into the market, is probably more pressing for the EU. Although the eurozone has technically entered into a phase of recovery, it is very fragile in comparison to both the UK and the US.

One issue still to be fully dealt with is the German election; more specifically, who Angela Merkel will join to form her coalition party. While there is no specific deadline, it is widely believed that the Christian Democratic Union is keen to thrash something out sooner rather than later.

The last three weeks have seen the euro drop against the US dollar by roughly 400 pips. Over a short period of time this would not be an issue, but due to the length of this slump there will be traders looking for a meaningful attempt to halt and reverse this pattern. With trade negotiations between Europe and the US currently underway, this could be a telling month for the DAX and the EU.     

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