Market Talk
- The US dollar recovers against safe-havens Japanese Yen and Swiss on Tuesday after it was hit hard on Monday’s rate cut from the Federal Reserve to try and buttress the U.S economy flopped badly, as the coronavirus disrupts global activity ever more deeply
- Risk-sensitive currencies struggled to stay afloat as coordinated moves by central banks failed to quell investor trepidation over the spreading coronavirus pandemic. Gold was dragged into the global market rout, falling to $1456.80, its lowest level since Nov 2019.
- Global risk assets were routed over the past several days, with turmoil engulfing many markets on worries the outbreak and draconian containment measures could trigger steep recessions in major economies despite measures and stimulus by government and central banks.
- The Canadian dollar, which has strong correlation with oil prices, sank to a four-year low of C$1.4020 per U.S dollar, as oil prices plummeted on a Saudi-instigated price war. U.S. benchmark oil futures fell $3.03 to settle at $28.70 a barrel, near a 4-year low on worries of weak demand due to a slowing global economy
- The British pound was also under pressure, dogged by worries about not only Britain’s exit from the European Union but also its sizable current account deficit. Sterling traded at $1.2265 having hit a five-month low of $1.2203 earlier.
Chart Focus AUD/JPY
Key Points
1. Sell AUD/JPY recommendation
2. Sell AUD/JPY at 65.15. Stop at 65.50 and target at 64.30
3. A slowdown in global economic activity due to the rapid spread of the coronavirus is weighing on the Aussie
4. Price is unable to move above a strong resistance zone and both MACD and Stochastic are starting to turn down, hinting of further price declines
Fundamental Comments
1. Rapid spread of coronavirus leads to demand for safe haven Yen
2. Slowdown of global economy is weighing on commodity currency Aussie
Technical Comments
1. Price is capped by 20EMA and price support turned resistance points
2. Both MACD and Stochastic are starting to turn down, hinting of further price decline
Key Levels
| Support | 64.90 | 64.55 | 65.25 |
| Resistance | 65.30 | 65.80 | 66.10 |
Technical Overview
USD/JPY – Our sell order was filled and stopped out this morning. Yesterday we missed the entry order when price only rose to a high of 107.67 but fell to our profit target before bouncing up this morning. MACD is turning bullish as we write but Stochastic has a bearish crossover. Price is also above the 20EMA. We think price is likely to continue higher to 107.45 before resuming its downtrend.
| Support | 106.30 | 105.85 | 105.30 |
| Resistance | 106.75 | 107.15 | 107.60 |
EUR/USD – Today’s candles have been small after last night bigger movement. This is a hint of price consolidation. We are likely to see price consolidate within yesterday’s range of 1.1235 to 1.1082. Stochastic is near to the overbought zone. MACD is neutral and flat at the moment. We would recommend staying aside for this pair for today unless looking to trade the range.
| Support | 1.1145 | 1.1100 | 1.1050 |
| Resistance | 1.1185 | 1.1225 | 1.1255 |
GBP/USD – Price trend is bearish at the moment but Stochastic is into the oversold extreme. We favour getting into a short position on a rally 1.2380 for 1.2200 again. MACD is bearish and strong, with both its lines deep below the zero line. 20EMA is pointing lower with a steep gradient, which is a hint of a strong trend.
| Support | 1.2200 | 1.2160 | 1.2115 |
| Resistance | 1.2270 | 1.2325 | 1.2370 |
XAU/USD – 20EMA is pointing lower with a steep slope, which is a hint of strong bearish trend at the moment. MACD confirms with both its lines deep below the zero line. Stochastic is rising from the oversold extreme at the moment. Price could be capped at $1520 and we could see another movement to test the overnight low at $1451
| Support | 1478.05 | 1461.80 | 1451.20 |
| Resistance | 1503.40 | 1518.90 | 1527.95 |
USD/CNH – A price decline from the high of 7.0517 was halted at the Fibonacci 50% correction point of the rally from 6.9042 to the high of 7.0517. As long as price can stay above the Fibonacci 50% or 62% correction points at 6.9777 and 6.9603 respectively, we can see another rally to test the old high of 7.0510 again in the next few days.
| Support | 6.9970 | 6.9805 | 6.9685 |
| Resistance | 7.0125 | 7.0270 | 7.0330 |
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