The fact that Germany’s economy is the locomotive of the entire European Union is not news to anyone. That’s why special attention has to be given to the developments in Germany in order to predict the future of the European Stock Market and the Euro. With the ECB keeping negative interest rates fixed for the “foreseeable future” and the FED preparing to hike that rate again, the Euro is desperate for some good news. Will it receive this news from Germany?

The simplest answer is that it won’t. The DAX, the main index of German shares, now suffers the 3rd consecutive losing day, after a small bounce in the beginning of February. It is quickly going towards the 9000 line which proved to be decent support in early 2016. Most analysts agree that this new downward impulse will probably test this year’s lows, and if no good data will be in sight, could even go lower.

From a technical perspective, the DAX failed to hold its gains over the key 9500 resistance line. It’s still stuck in a downward channel which will probably send it below the 9000 line in the next few weeks. This comes in close connection with the rest of the European Stock market. The main sector that drives these stocks down is the Energy sector, mainly through oil and gas prices. The Energy sector as a whole dropped nearly 2% on the 24th of February, and more losses are predicted in the following days.

Sadly for the European Stock Market, it seems to be dragging German stocks in the wrong direction, instead of the other way around. Geopolitical uncertainty, the Brexit, a stronger-than-expected Euro as well as diplomatic issues are slowing down the economy. The economic data coming from Germany is having a turn for the better, so we must carefully watch any news coming from this country – a few good spikes can send the entire Euro area forward. It clearly needs it.