The Greenback is alive and well today, rallying versus the majors. Thus far, the EUR/USD (-0.38%), USD/CAD (+0.36%), GBP/USD (-0.25%), USD/CHF (+0.32%), and USD/JPY (+0.44%) are all trending in favor of the dollar. With only a few hours left in the session, it looks like the USD is poised to close early-week trade on a high note.

Today’s news cycle has been relatively quiet. However, there was an interesting release in the CB Consumer Confidence (March) report. The figure for March came in at 109.7, well above projections (96.9) and the previous release (90.4). This is a major jump and suggests that U.S. citizens are becoming optimistic about the ongoing COVID-19 recovery.

On Capitol Hill, there is a new debate over COVID-19 recovery funds and where they may be headed. Last week, President Joe Biden released plans for a sweeping $3 trillion COVID-19 recovery stimulus package. The proposal is to be broken up into two parts facing infrastructure and direct aid. Later today, Biden is scheduled to give a speech on the massive “Build Back Better” plan. If passed at some point in Q2 2021, the Biden administration will have spent nearly $5 trillion on COVID-19 stimulus and aid packages in under six months.

Conventional forex wisdom tells us that more stimulus is likely to lead to inflation and a debasing of the Greenback. This is proving incorrect today, as illustrated by the drop in the EUR/USD.

EUR/USD Breaks To The Bear, Support In View

The weekly chart below gives us a great look at how the EUR/USD has performed over the past year. Following a swift drop during March 2021, values have steadily risen. However, the long-term uptrend is now under fire as this pair is in the midst of a three-week losing streak.

Here are two support levels worth watching for the near future:

• Support(1): 38% Macro Retracement, 1.1693
• Support(2): November Low, 1.1602

Bottom Line: As long as rates stay above the 38% Macro Fibonacci Retracement (1.1693), a bullish bias will remain warranted. If not, we may be in for a challenge to last year’s uptrend.

Until elected, I’ll have buy orders queued up in the EUR/USD from 1.1697. With an initial stop loss at 1.1667, this trade produces 30 pips on a standard 1:1 risk vs reward ratio.