- Commodity currencies slipped against their safe-haven rivals such as the dollar and yen on Monday as a record output cut agreed by OPEC and other oil producing nations failed to offset broader concerns about slumping global demand.
- Oil prices had gone into free-fall on worries about the virus and a price war between Saudi Arabia and Russia, which was seen straining the budgets of oil producers and hammering the U.S. shale industry.
- Currencies from Norway, Mexico, and Canada – all major oil producers – got a boost on Friday as the agreement to cut output began to take shape, but these gains disappeared on Monday as investors avoided risk assets.
- China is expected to release export data for March on Tuesday, which will be closely watched for signs of the pandemic’s damage on the global economy.
- Trading could be subdued as financial markets in Australia, New Zealand, Hong Kong, Italy, France and Britain are closed for the Easter Monday holiday. Tonight Canada is also on holiday while the US is opened for business.
Chart Focus EUR/USD
1. Sell EUR/USD recommendation
2. Sell EUR/USD at 1.0950. Stop at 1.1005 and profit target at 1.0855
3. A turnaround in coronavirus situation in New York and interest rate differential are both in the US dollar favour.
4. Price is capped by the Fibonacci 50% correction point and momentum indicators are hinting of a price decline.
1. NY Governor Cumo’s assessment of a the upturn in coronavirus in New York is likely to aid the US dollar
2. Interest rate differential is in the US dollar favour.
1. Price is capped by the Fibonacci 50% of the price decline in this rally
2. Momentum indicators are near its peak and are hinting of a decline in price
USD/JPY – Price was capped at 109.20 which was also the Fibonacci 50% correction level of the previous decline from 111.70 to the recent low of 106.90. If price stays below 109.20, we are likely to see a movement to 106.90 to test the low again. MACD is bearish and both its lines are moving lower. Stochastic, however is near to the oversold extreme. Above 109.20 is likely to send price higher to 111.70. We prefer the downside.
USD/SGD – Price has been capped by the moving average at 1.4180 and this was followed by a Spinning Top candlestick pattern. If price is unable to move above 1.4180, we are likely to see a test the next strong support area at 1.4050. MACD is turning bearish and Stochastic is still moving lower. We favour the downside.
GBP/USD – Price has climbed up to the upper boundary of a sideway consolidation at 1.2475. A break of this resistance is likely to send price higher to 1.2525 or 1.2560. Stochastic is near to the overbought extreme and MACD is rather flat, which is a hint of a weak trend. Failure to move above 1.2480 could send price lower to 1.2365 again.
XAU/USD – Price has reached a high of $1691.25 but with bearish divergence warning from MACD. Although MACD is still bullish, it is weak and is warning of a possible price high. Stochastic has also reached the overbought extreme and could be turning down. If price is capped below $1700, we could see price going lower back to 1660 in the next couple of days ahead.
USD/CAD – Price has dropped to 1.3930 after a rally in crude oil price. If price can break the base at 1.3920, it is likely to decline to 1.3820. MACD is bearish at the moment with both its lines below the zero line. Stochastic is moving into the oversold extreme. A move above 1.4080 would abort our bearish view.