Will Quarter-End-Flows Generate Big Moves Today?

Today is not only the last day of March but also the last day of the first quarter and traders know very well that month-end and quarter-end rebalancing flows might lead to volatile movements in the currency market. Yesterday we saw the U.S. dollar strengthening against the euro and British pound while short traders in both EUR/USD and GBP/USD were able to profit from the greenback’s strength.

U.S. President Joe Biden is due to announce part-one of his infrastructure package today and it will be interesting whether we will see a continuation of the greenback’s rally or whether a correction is due to profit taking and month-end flows.

EUR/USD

The euro is on its way down towards 1.17. While we may see even a test of 1.1690, traders should brace for potential pullbacks since the pair is in oversold territory. However, a break below 1.1680 may pushes the pair lower towards a test of 1.1630 and 1.16. A current resistance on the other side is seen at 1.18.

GBP/USD

Based on the recent downward trend channel we may see a continuation of the cable’s decline targeting at 1.36 and 1.3570. An upside break of 1.3850 could however pave the way for fresh gains towards 1.40.

DAX

The index hit the bullish target at 15000 and market participants wonder whether more gains could be in store. From a technical perspective, as long as the DAX holds above 14850-14800, we may see an extension of gains until 15120 but this depends on the market’s risk appetite and today’s rebalancing flows. If 14800 breaks, gains could be corrected towards 14700 and 14600.