March has been a good month for the Greenback versus the euro. Rates of the EUR/USD are down dramatically, falling 2.25%. While the drivers of this action are mostly rooted in COVID-19 fallout, it’s tough to take a long-term bearish stance in this market.

As far as the USD goes, the key question facing valuations is if and when the Fed is due to relax its unlimited QE policies. Today, the CME FedWatch Index is showing a 97.8% chance of rates being held at 0.0-0.25% through the remainder of 2021. When coupled with the Fed’s recent statements that bond purchases are to continue, one is inclined to think that QE is going to be the rule until 2022. 

I think it’s safe to say that the new European COVID-19 lockdowns are the premier market driver of the EUR/USD. The U.S. is currently going the other direction, working toward a full economic reopen. While this is an obvious point, it is likely the single most important underpinning of the eurodollar exchange.

EUR/USD Rallies Toward Topside Resistance

It has been a positive session for EUR/USD bulls. Subsequently, rates are in the green and paring yesterday’s losses. However, a short-term bearish bias is warranted and the daily downtrend is intact.

Bottom Line: As long as the Spike Low (1.1762) remains valid, I’ll have sell orders in the queue from 1.1824. With an initial stop loss at 1.1859, this trade produces 35 pips on a standard 1:1 risk vs reward ratio.