Market Talk
-The dollar stood tall over the languishing euro and heavily sold exporter currencies on Wednesday, as investors reckoned with deepening economic fallout from the coronavirus while the offshore Yuan Yuan moved above the psychological 7 barrier.
– The Euro fell to 1.0785 against the dollar after a highly watched German ZEW survey on Tuesday, showed a sharp slump in investor confidence and fuel growing pessimism about the outlook for Europe’s largest economy. Increasing signs of divergence between the European and U.S. economies are not helping the single currency as well.
– The Australian dollar also traded lower below 0.67 against the US dollar after the Reserve Bank of Australia’s minutes reiterated that low interest rates will probably be required for an extended period, flagging concerns about the coronavirus.
– The new coronavirus Covid-19 has caused 2,004 deaths in China and infected more than 74,000 people, while measures to contain it have paralyzed the economy and the supply chains it feeds. Apple warned of lower Q3 sales while auto makers’ plants are idling due to a lack of parts.
– The British pound was roughly unchanged against the dollar after giving up gains as traders weighed up mixed jobs data against growing expectations that the U.K. will unveil fiscal measures intended to boost economic growth.
Chart Focus USD/CAD
Key Points
1. Buy USD/CAD recommendation
2. Buy USD/CAD at 1.3230. Stop at 1.3195 and profit target at 1.3295
3. Deepening economic impact and falling crude oil demand as a result of coronavirus are weighing on the Canadian dollar
4. Price is supported and MACD could be turning bullish are signs of a bullish trend.
Fundamental Comments
1. Deepening economic impact from coronavirus is likely to favour the US dollar
2. Halt in crude oil price rally due to falling demand from coronavirus impact is weighing on the Canadian dollar
Technical Comments
1. Price has found support on three occasions around 1.3225.
2. MACD could be about to turn bullish and have a bullish crossover, which could be a bullish sign.
Key Levels
| Support | 1.3225 | 1.3190 | 1.3155 |
| Resistance | 1.3255 | 1.3280 | 1.3310 |
Technical Overview
USD/JPY – Price stayed within last week range of 109.65 to 110.10 yesterday. Price reached a low of 109.65 yesterday and this morning we saw a high of 110.10. Stochastic is about to have a bearish crossover. MACD is bullish with both its line above the zero line. 20EMA is rising with a steep trend. Watch the breakout for direction
| Support | 109.90 | 109.60 | 109.20 |
| Resistance | 110.15 | 110.30 | 110.65 |
EUR/USD – – Price reached a low of 1.0785 overnight and has rallied higher to 1.0802. We believe price is close to a bottom after a 12-day decline. Stochastic has moved just above the oversold extreme but looks weak. MACD is moving higher but MACD is still bearish. We prefer to wait for a bullish reversal confirmation to get on the long side.
| Support | 1.0785 | 1.0765 | 1.0730 |
| Resistance | 1.0810 | 1.0845 | 1.0870 |
GBP/USD – Price dipped below support at 1.2990 to register a low of 1.2970 only to bounce straight back up again. Price rallied to a high of 1.3048 but was unable to sustain its rally. Stochastic is moving up but MACD is still neutral at the moment. We think price is likely to consolidate for today within boundaries at 1.3070 and 1.2970.
| Support | 1.2970 | 1.2940 | 1.2905 |
| Resistance | 1.3010 | 1.3040 | 1.3070 |
XAU/USD – Yesterday, price breached the upper boundary of our range at 1593, and rallied to a high of 1604.90. Stochastic is the in overbought zone but MACD is bullish and strong at the moment. We think price is likely to continue its rally to test the previous high at 1611. A move below 1593 would negate our bullish view.
| Support | 1593.05 | 1584.85 | 1576.90 |
| Resistance | 1611.00 | 1615.55 | 1627.95 |
AUD/USD – Our sell order was not filled at 0.6705 as rallied to a high of only 0.6700. MACD is bearish; both its lines had dropped below the zero line. Stochastic is close to the oversold extreme but looks weak. Our bearish view remains unchanged. We think price will be capped at 0.6700 and another decline to test the previous low at 0.6660 is likely.
| Support | 0.6685 | 0.6660 | 0.6630 |
| Resistance | 0.6700 | 0.6747 | 0.6775 |
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