EUR/USD trades cautiously over 1.20 ahead of EZ & US services PMI & US ADP employment change. Dax tested 50 EMA in the previous session, can the support continue to hold?

EUR/USD holds 1.20 ahead of busy day datawise

EUR/USD is trading cautiously after gains in the previous session and ahead of a busy few days. 

The Fed’s Kashkari reiterated the Fed’s dovish stance after Janet Yellen hinted at tightening policy 

The COVID picture in Canada & Japan appears to be deteriorating but fails to override vaccine optimism   

Eurozone (EZU) quarterly economic forecasts, services and composite PMI data are due along with US ISM services PMI & ADP Employment change ahead of Friday's non-farm payroll.

Where next for EUR/USD? 

EUR/USD broke out of its ascending channel at the end of April. It has been trending lower since. It trades below its 20 & 50 EMA in a near term bearish trend. The 20 EMA also crossed below the 50 EMA is a bearish signal and the RSI is also supportive of further losses. 

However, the sellers need to break below 1.20/1.1995 support this week’s low in order to book further losses towards 1.1950 support April 15 and 1.1900 round number.  

A daily close over 1.2035 yesterday’s high could suggest that a temporary low is in place and aid a recovery towards 1.2075 (FXE, UUP). 

Dax rebounds after steep sell off

Following a weak handover from Wall Street on tech led losses & after sinking over 2% in the previous session, the Dax is pushing higher, leading the gains in Europe.

Tech stocks will be in focus and could see some weakness on the open.

Attention will turn to German services & composite PMI data later today.

Earnings from Deutsche Post, Hugo Boss impressed. Numbers from Commerzbank and Allianz are due.

Where next for the Dax? 

The Dax broke out of its holding pattern in the previous session, sliding below its 20 EMA on Tuesday and finding support on the 50 EMA. The RSI is in bearish territory although attempting to point higher. 

Whilst the Dax remains above its 50 EMA and the ascending trendline dating back to November, the medium term upward trend remains intact. It would take a move below 14850 the 50 EMA and 14700 the ascending trendline support for sellers to gain traction towards 14440 low March 24.  

Any recovery would need to break above 15100 the lower band of the holding pattern in place since early April.