Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Time to Buy Euros? Not Yet

By Kathy LienForexMar 22, 2021 21:23
Time to Buy Euros? Not Yet
By Kathy Lien   |  Mar 22, 2021 21:23
Saved. See Saved Items.
This article has already been saved in your Saved Items
One of the best performing currencies today was the euro. After selling off quickly and aggressively in the first week of March from a high of 1.21 to a low of 1.1835, the single currency quietly consolidated above the 200-day simple moving average as dovish comments from the Federal Reserve and an overall demand for high-beta currencies halted the slide in the currency. As tempting as it may be to pick a bottom in EUR/USD, now is not the time to buy. 
The Eurozone is mired in troubles. It has lagged the U.S. and U.K. in vaccine rollout and, as a result of that delay, new coronavirus cases are on the rise, forcing countries across the region to tighten restrictions. Earlier this month, Italy locked down for the third time and, over the weekend, France initiated a partial lockdown in 16 regions, including Paris. This morning, Germany extended its current lockdown to April 18 as all three countries get hit by a third wave. These restrictions that began as early as December in some countries has and will continue to take a significant toll on growth. According to the Bundesbank, the German economy contracted sharply in the first quarter – numbers that we will see next month. The European Central Bank knew this slowdown was happening and decided to accelerate asset purchases in March.  
Looking ahead, Europe’s troubles aren’t expected to improve quickly. The decision by many nations to temporarily halt the AstraZeneca (NASDAQ:AZN) vaccine in early March created significant vaccine skepticism. With trust compromised, it will be an uphill battle for these countries to reach herd immunity. Until that happens, the central bank will remain cautious, growth will be slow and the euro should underperform other currencies. Economists are looking for improvements in this week’s Eurozone PMIs and German IFO report, but in light of more restrictions, the risk is to the downside for these reports. 
Eventually, the vaccine rollout in Europe will gain momentum, leading to a stronger recovery and, at that point, EUR/USD could be a screaming buy. Until that happens, however, now is not the time to be going long euros, especially as the gap between German and U.S. bond yields widen. 
Lower 10-year Treasury yields drove the greenback lower against most of the major currencies. Existing home sales also fell more than expected as supply dropped by the biggest amount ever. Homeowners are snapping up homes quickly, while potential sellers delay listings. Combined this has driven the median price of an existing home sold to its highest level ever. New home sales are due for release tomorrow. 
After passing the $1.9-billion stimulus package, U.S. President Joe Biden is preparing a multi-part $3-trillion infrastructure spending plan that will be financed, in part, by higher taxes. More details will follow in the coming weeks and investors need to keep an eye on these developments because tax hikes could threaten the equity market rally.  
While the euro traded higher, GBP/USD ended the day unchanged after bouncing off the 50-day SMA. This week is a big one for the currency with labor market, inflation, PMI and retail sales figures due for release. Improvements are expected all around, but the central bank’s cautiousness has made investors reluctant buyers of the currency. Tomorrow’s jobs report could change their minds. According to the PMIs, the manufacturing sector reported its quickest pace of job growth since June 2018. The construction sector reported the fastest since March 2019 and, while services employment continued to decline, the pace slowed. 
The Australian and New Zealand dollars participated in the rally, but the Canadian dollar fell for the third day in a row.
Time to Buy Euros? Not Yet

Related Articles

Jeffrey Halley
Currency Markets Look For Direction By Jeffrey Halley - Nov 24, 2020

Dollar whipsaws against euro, sterling Currency markets were whipsawed last night, with the dollar index trading in a near 80-point range before closing almost unchanged. The...

Time to Buy Euros? Not Yet

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email