The DAX index futures were 1.39 percent down by 05:25 GMT to trade at 12,592 points. Investors shifted their focus into a fresh batch of speeches from central bank leaders.
Ahead in the session, Bank of England Governor Mark Carney, Bank of Japan Governor Haruhiko Kuroda and European Central Bank President Mario Draghi are all scheduled to speak at 13:30 GMT. Their remarks could weigh heavily on the index and create strong volatility.
Before these announcements, we could see a moderate downward extension as some traders sell off their long positions and opt for a more cautious stand.
On Tuesday, the German index was mainly hit by remarks from ECB’s Draghi, who took markets by surprise with a hawkish rhetoric on monetary policy tightening.
“As the economy continues to recover, a constant policy stance will become more accommodative, and the central bank can accompany the recovery by adjusting the parameters of its policy instruments,” said Draghi in his opening statement at the Sintra Forum in Portugal.
While his comments are still far from turning into real policy changes, it certainty differed of his usual approach. Europe’s first economy is (of course) widely affected by policy changes, although not long ago Draghi warned German investors about an eventual reduction of the bank’s Quantitative Easing program.
As we predicted at the beginning of this week, the index remains inside a range between 12,550 and 12,950 points. At the time, the next support is found at the lower band of the channel at 12,550 and depending on today’s events, the index could gain back some positions.
There is, however, a general risk of extending to the downside in case market sentiment in Europe continues to deteriorate in the session. Nevertheless, buying support is likely to help the index move back to the center of the range.