Navigate the markets this month with OANDA's technical analysis. We delve into the Nasdaq 100's potential reversal, Germany 30's bullish momentum, and AUD/USD's reaction to risk-off sentiment, providing insights for traders to capitalize on key opportunities.
For March, we will highlight three relevant instruments—the US Nasdaq 100, Germany 30, and AUD/USD—to note in the medium-term horizon (multi-week) according to the latest developments in macro (fundamentals) and momentum factors (technical analysis).
The US stock market's outperformance against the rest of the world has dwindled
Fig 1: 3-month rolling performance of major US stock indices, Hong Kong 33, Germany 30 & AUD/USD as of 27 Feb 2025 (Source: TradingView)
The major US benchmark stock indices have recorded stellar and outsized returns in the past two years versus the rest of the world. The technology-heavyweight Nasdaq 100 has notched annual gains of 54% in 2023 and 25% in 2024, surpassing the performance of the iShares MSCI All-Country World Index excluding US ETF that recorded smaller gains of 16% and 5%, respectively, over the same period.
The superior performance of the Nasdaq 100 in the past two years has been driven by the mega-cap component stocks of the US stock market that rode on the coattails of America’s leading edge in the development of artificial intelligence (AI) software and hardware, particularly, Nvidia’s higher-end data centre graphics processing units’ chips.
However, past outsized returns do not always lead to similar positive returns in the future. Since the start of 2025, the Nasdaq 100 has witnessed a dismal performance with a minuscule year-to-date return of 0.6% as of 26 February.
In contrast, China-related AI stocks listed in Hong Kong had a fantastic bull run so far with the emergence of Chinese start-up DeepSeek’s cutting-edge AI large language model reasoning capabilities amid lower operational costs due to its open-source framework versus US-based OpenAI’s ChatGPT. The Hang Seng Index and the Hang Seng TECH Index recorded year-to-date gains of 18% and 24%, respectively, as of 27 February. .
A recap on our prior February’s Monthly Tactical Views: “Potential bullish reversal for Hong Kong 33 at 200-day moving average”.
Deterioration in US economic condition and earnings outlook
Fig 2: Citigroup US Economic Surprise & Earnings Revision Indices as of 24 Feb & 21 Feb 2025 (Source: MacroMicro)
Also, several key leading economic indicators of the US economy have come in below expectations in February, such as consumer confidence and S&P Global flash services PMI data. These economic deteriorations can be gauged by the trend of the Citigroup Economic Surprise Index, which is the sum of the difference between the actual value of various economic data and their consensus forecast. If the index value is less than zero, it suggests that the overall financial condition in the US is generally worse than expected.
The Citigroup US Economic Surprise Index has trended downwards steadily in the past month since 17 January, with a value of 22.80 to -5.50 as of 24 February. The downward drift represents an increased risk of economic growth slowdown in the US (see Fig 2).
Another fundamental data to watch is the Citigroup US Earnings Revision Index, which calculates the portion of listed US firms that have received upward revisions in earnings per share minus the proportion of those with downward EPS revisions. When the index is above zero, it means that analysts, on average, are optimistic about the outlook for corporate earnings. Conversely, a reading below zero means analysts are relatively pessimistic.
Since the start of 2025, the Citigroup Earnings Revision Index has recorded consecutive weekly negative readings, with the latest value at -0.14 for the week ending 21 February.
Both observations from the Citigroup Economic Surprise and Earnings Revision Indices suggest that the US stock market has an increased odds of weakening.
US Nasdaq 100 broke below 50-day moving average with a bearish trend condition
Fig 3: US Nasdaq 100 medium-term & major trends as of 27 Feb 2025 (Source: TradingView)
The daily MACD trend indicator flashed out an earlier bearish divergence on its histogram on 18 February, coupled with a recent MACD signal line bearish crossover last Friday, 21 February. These observations suggest the bullish momentum of the medium-term uptrend phase of the Nasdaq 100 from the 5 August 2024 low may be exhausted, and a trend change toward a potential corrective decline sequence may be imminent.
In addition, the number of Nasdaq 100 component stocks that are making new 52-week highs (smoothed by a 5-day moving average) are lesser since 11 February, while the Nasdaq 100 scaled to a fresh all-time closing high on 19 February, which represents a weak market breadth condition at this juncture.
Watch the key 20,790 intermediate support on the Nasdaq 100 CFD Index (a proxy of Nasdaq 100 E-mini futures), and a daily close below it may trigger a multi-week corrective decline sequence to expose the medium-term supports of 19,840 and 18,310 (see Fig 3).
However, clearance above the 22,470/980 medium-term pivotal resistance zone invalidates the bearish scenario for the continuation of its impulsive upmove sequence for the next medium-term resistance zone to come in at 23,980/24,440 in the first step.
Potential bullish acceleration in Germany 30 remains intact
Fig 4: Germany medium-term & major trends as of 28 Feb 2025 (Source: TradingView)
The price actions of the Germany 30 CFD Index (a proxy of the DAX futures) staged a bullish breakout above the upper boundary of a major ascending channel on 17 January.
Thereafter, it continued to trade above its 20-day moving average without any prior bearish divergence condition being flashed out by its daily RSI momentum indicator (see Fig 4).
Watch the 21,270 key medium-term pivotal support to maintain the bullish bias for the next medium-term resistances to come in at 23,140 and 24,100.
On the other hand, a breakdown below 21,270 invalidates the bullish impulsive upmove sequence to kickstart a potential medium-term (multi-week) corrective decline to expose the next medium-term supports at 20,430 and 19,690 (also the 200-day moving average).
AUD/USD bearish reaction at 0.6400 key resistance
Fig 5: AUD/USD medium-term & major trends as of 28 Feb 2025 (Source: TradingView)
Despite a slew of less dovish rhetoric speeches from Australia’s central bank (RBA) Governor Bullock and Deputy Governor Hauser warned market participants to tone down the expectation of further interest rate cuts in 2025 after RBA enacted its first 25 basis points cut in four years to reduce the cash policy rate to 4.1% on last Tuesday, 18 February, the AUD/USD has failed to kickstart a bullish momentum run.
On the contrary, the Aussie dollar could not maintain its earlier gains against the US dollar from 18 February to 21 February. Instead, the AUD/USD recorded a decline of 1.3% from an intraday high of 0.6409 on 21 February to a current level of 0.6245 at this time of writing.
The Aussie dollar is considered a high-beta currency that has a higher sensitivity toward sentiment swings in the global stock market and commodities, especially base metals, as well as a direct correlation with other commodities proxy currencies such as the Canadian Loonie (CAD).
US President Trump has highlighted that the earlier planned 25% tariffs on Canadian exports to the US were scheduled to hit Canada on time next Tuesday, 4 March after the “cooling off period” ends.
Also, the lacklustre movements of the major US stock indices in the past month where the mega-cap and artificial intelligence (AI) centric S&P 500 and Nasdaq 100 have broken below their respective 50-day moving averages on Monday, 24 February, ignited a current risk-off sentiment behaviour that in turn triggered a negative feedback loop back into the Aussie dollar (see Fig 1).
In the lens of technical analysis, the 5% rebound seen in the AUD/USD from its 3 February low to 21 February close is likely to be a corrective sequence (“dead cat bounce”) within its major downtrend phase rather than the start of the potential bullish reversal.
In addition, its daily MACD trend indicator has flashed out a prior Histogram bearish divergence condition coupled with a recent MACD bearish crossover on 27 February. These observations suggest that a new potential impulsive down move sequence of its medium-term downtrend phase may have emerged for the AUD/USD (see Fig 5).
Watch the 0.6400 key medium-term pivotal resistance, and a breakdown below 0.6120 intermediate support exposes the next medium-term supports at 0.6030/5990 and 0.5870/5810.
On the flip side, a clearance above 0.6400 invalidates the bearish scenario for the next medium-term resistance to come in at 0.6540 (also the 200-day moving average).
