Is it too soon for a EUR USD rebound

A global example of this is the German Stock index, the DAX, up over 6% year to date compared to the tech-heavy NASDAQ index, trading flat for the year.

In a simplified world, this may lead to an expectation of support for the EUR/USD as investors need to purchase the Euro currency to allow them to buy into European stock indices, such as the DAX and the CAC.

Learn more about trading indices

Despite this and the overnight release of Eurozone flash PMI’s, which showed manufacturing rising to its highest level on record at 62.4 as well as the German Government walking back expectations of a five-day lockdown over Easter, the EUR/USD closed at its lowest level since November 2020.

Concerns remain over the slow vaccine roll out in Europe and a possible extension of lockdowns that delay the reopening. In contrast to the situation in the U.S of an ongoing reopening, stimulus checks and prospects of a large infrastructure package to keep the recovery on track.

Learn more about trading FX

Nonetheless, this isn’t a new story and it has been the driver of the EUR/USD’s decline during March. The question is how much more needs to be priced in?

After breaking below the early March 1.1835 low this week, the EUR/USD is testing trend channel support currently around 1.1800ish. Interestingly, bullish divergence can be viewed via the RSI indicator that indicates a loss of momentum to the downside. Tentative reasons to look for a bounce, more so if the EURUSD could reclaim on a closing basis the 200day ma at 1.1855.

However, should the EURUSD fail to establish a base near current levels, and then slips through support at 1.1800/80, allow for a deeper pullback towards medium-term support at 1.1600.

Source Tradingview. The figures stated areas of the 25th of March 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.