European Morning Forecast: DAX 30 Rally In Question, EUR/USD Swinging Higher

DAX 30 LEVELS

The slight correction we saw last week in the DAX 30 has been beneficial to buyers. The German index has resumed upside momentum after bouncing off the 15,080 line, but it has struggled to keep the gains symmetrical over the last few sessions. This week has kicked off flat so far as buyers are finding resistance around the 12,290 area, where price stagnated for a few sessions a fortnight ago.

This week is going to be a busy one for the stock market with corporate earnings picking up pace both in Europe and the US. The data has been strong thus far and we expect it to continue showing strong earnings in the first quarter of the year, so the DAX 30 is likely to keep a bullish bias. The immediate objective is to overcome the strong resistance the index is facing at its current price, with the 127.2% Fibonacci extension (15,424) as the next goal if upside momentum is to continue.

But there are still some broader market risks relating to Covid-19 and upcoming central bank meetings so we may see the DAX 30 struggle once again to get out of its current levels. If so, bullish momentum is likely to weaken and the 15,000 mark may be the next step for sellers.

DAX 30 Daily chart

European Morning Forecast: DAX 30 Rally in Question, EUR/USD Swinging Higher

EUR/USD LEVELS

The continued weakness in the US Dollar is doing wonders for EUR/USD, with a strong rebound on Friday sending the pair just short of the 1.21 mark, just 3 days after crossing the 1.20 line for the first time in 6 weeks. The euro has been bid throughout the Asian session so we’ve seen the air creep above 1.21 before the European open, but there is a strong resistance at 1.2121 that has been in play for a while that has caused buyers to back off slightly.

The overall sentiment around the Euro seems to have shifted from a bear market to a neutral in recent weeks, so we may see EUR/USD hang around its current levels for longer than expected before we see a possible bearish reversal. If so, the 1.22 mark is likely to be a short-term objective for buyers as the pair has been below this level pretty much all of 2021 so far.

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