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The DAX is trading at 9220, while investors look ahead to the interest-rate announcement and European Central Bank (ECB) statement at 12.45pm and 1.30pm (London time) respectively. Interest rates in the eurozone are currently at an all-time low of 0.25%. Economists are not expecting a change in rates, but there is speculation that the ECB might introduce a stimulus package in order to tackle deflation.
A certain amount of inflation is required to keep an economy ticking over, and when inflation drops it suggests weak consumer confidence. Some economists are suggesting the ECB could address this by engaging in a bond-buying programme like the Federal Reserve’s. If the ECB decides to lower interest rates or suggests a stimulus package, we could see equities trade higher.
As Alastair McCaig explained, the DAX has been in an upward trend since May 2013. And while we are above the support line of 9102 we could retest the recent highs of 9700.