EUR/USD Mid-Session Technical Analysis for March 25, 2021

The Euro is trading flat against the U.S. Dollar on Thursday while hovering near a four-month low during the Asian session as market participants focused on divergent recovery outlooks for the United States and Europe, and risk appetite waned.

Concerns about extended lockdowns in Europe also weighed on markets. German Chancellor Angela Merkel’s decision to ditch plans for a lockdown over Easter did little to improve sentiment.

At 10:22 GMT, the EUR/USD is trading 1.1817, up 0.0007 or +0.06%.

BMO Capital Markets Analyst Turns Bearish

Stephen Gallo, European head of FX strategy at BMO Capital Markets, wrote in a note to clients that he expected the Euro to fall to $1.16 over the next one month.

“The EU’s ‘third COVID wave’, the relatively low vaccine take up rate and a more subdued fiscal impulse will probably cause the Euro Zone’s recovery to lag North America’s by 2-3 months,” Gallo wrote.

“The ECB’s desire to cap yields is evidence that even a moderate re-pricing of European sovereign debt is a source of systemic risk,” he added.

Gallo also said that the handling of the vaccine rollout in Europe, and “resultant forms of protectionism” could permanently deter investors.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1800 will reaffirm the downtrend. The main trend changes to up on a move through 1.1989.

The minor trend is also down. A trade through 1.1947 will change the minor trend to up. This will shift momentum to the upside.

The main range is 1.1800 to 1.2349. The EUR/USD is currently trading on the bearish side of its retracement zone at 1.2010 to 1.2074.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD is likely to be determined by trader reaction to 1.1811.

Bearish Scenario

A sustained move under 1.1811 will indicate the presence of sellers. Taking out 1.1800 will reaffirm the downtrend. This could trigger an acceleration to the downside with 1.1745 the next likely downside target.

Bullish Scenario

A sustained move over 1.1811 will signal the presence of buyers. This will put the EUR/USD in a position to form a potentially bullish closing price reversal bottom. This won’t change the trend to up, but it could trigger a 2 to 3 day counter-trend move. The first potential upside target is 1.1895.

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