07-Apr-2020

1) Euro Awaiting EU Fin Min Answer To Corona Crisis
2) GBP/USD Analysis: Stages a Goodish Intraday Bounce, Not Out Of the Woods Yet
3) EUR/NZD: The Bear Is Slightly Ahead Than the Bull

1) Euro Awaiting EU Fin Min Answer To Corona Crisis

Yesterday was some kind of a ‘classic risk-on session’ on global markets. (Some) investors reacted to tentative signs that the coronavirus could reach its peak in Europe (maybe in the US) in a not that distant future. The trade-weighted USD stabilized (close 100.68), but the risk-on didn’t cause a big USD selling yet. USD/JPY even profited from the risk-on. Interest rate differentials also moved in favour of the US dollar but it probably was only of second tier importance for USD positioning. EUR/USD tested the recent lows (1.0770/75 area) intraday, but closed little changed at 1.0793. Still, the euro performance euro was mediocre compared to other risk-sensitive currencies like the Aussie dollar.

This morning, most Asian equity indices are in positive territory, but gains are modest given the WS rebound yesterday. The Japanese government announced an extra budget of JPY 16.8T. The yen is gaining modest ground, probably also as US equity futures show a mixed picture. The yuan is trading slightly stronger this morning, even as the PBOC took several measures to ease monetary conditions of late (USD/CNY 7.0770 area). The RBA as expected left its policy unchanged (policy rate at 0.25%). The Aussie dollar remains well bid after the meeting as the tone of the statement/comments was balanced (AUD/USD 0.6150 area). EUR/USD also tries to rebound from the 1.08 area.

Today, the eco calendar stays thin. Global sentiment and headlines on the Meeting of the EU Finance Ministers will to set the tone for trading. We assume most of the EU response will come within the established framework (ESM etc.). Some additional measures/steps to be financed on an EU level could support sentiment and the euro. Still, the outcome as usual might be balanced and quite complicated. Last week, EUR/USD falling below 1.09 deteriorated the technical picture. The pair tested 1.0775/70 support, but no sustained break occurred. The March low comes in at 1.0636. We also keep an eye on the trade-weighted dollar. The US currency might remain well bid, but we see no compelling reason for a break beyond the top near 103. EUR/USD rebounding above the 1.0950 area would be a first indication that downside pressure is easing.

Yesterday, the sterling initially remained rather well bid. EUR/GBP even returned to/below the 0.88 area. However, the UK currency lost some ground on headlines that UK PM Johnson had been moved to intensive care. Some consolidation in the 0.8750/0.90 area might be on the cards.

2) GBP/USD Analysis: Stages a Goodish Intraday Bounce, Not Out Of the Woods Yet

The GBP/USD pair had some good two-way price moves on the first day of a new trading week and was influenced by the news surrounding the UK Prime Minister Boris Johnson’s hospitalization. Following a modest weekly bearish gap, the pair gained some intraday positive traction in reaction to the UK Housing Secretary Robert Jenrick’s comments, saying that he heard that Johnson is doing well. The remarks helped soothe fears of any impending political complications and provided a modest lift to the British pound.

The uptick seemed rather unaffected by the downward revision of the UK Construction PMI, which recorded the steeped decline since April 2009 and illustrated the extent of economic fallout from the coronavirus pandemic. The pair quickly ran out of the steam on news that Johnson was moved to intensive care after his coronavirus symptoms worsened. The pair retreated around 100 pips from daily swing highs and subsequently fell below the 1.2200 round-figure mark during the Asian session on Tuesday.

Meanwhile, the latest optimism over slowing number of new coronavirus cases led to a strong recovery in the global risk sentiment. This eventually dented the US dollar’s perceived safe-haven status and turned out to be one of the key factors that extended some support, rather assisted the pair to stage a goodish intraday bounce and jump back closer to the 1.2300 round-figure mark. In the absence of any major market-moving economic releases, either from the UK or the US, developments surrounding the coronavirus saga will play a key role in producing some meaningful trading opportunities. As investor look for signs that the pandemic may be reaching its peak, the unpredictable nature of the unknown virus might continue to infuse some volatility in the global financial markets.

From a technical perspective, nothing seems to have changed much for the pair and the near-term bias still seems tilted in favour of bearish traders amid the occurrence of a death-cross on the daily chart. However, the pair’s inability to find bearish acceptance below the 1.2200 mark warrants some caution before placing any aggressive bets for any further near-term depreciating move.

In the meantime, the 1.2230-25 region now seems to protect the immediate downside and is closely followed by the 1.2200 round-figure mark. Sustained weakness below the mentioned handle is likely to accelerate the fall back towards daily swing lows, around the 1.2165 region, en-route the 1.2100 round-figure mark.

On the flip side, momentum beyond the overnight swing high, around the 1.2325 region, could get extended towards the 1.2375-80 supply zone. Some follow-through buying, leading to a move beyond the 1.2400 mark, has the potential to lift the pair further, though seems more likely to remain capped near the 1.2475-85 strong resistance zone.

3) EUR/NZD: The Bear Is Slightly Ahead Than the Bull

EURNZD: has been heading towards the south on the daily chart. The price made a strong bullish move on the daily chart. It seems that the price has been on bearish correction on the daily chart. Yesterday’s candle came out as a strong bearish candle. Thus, the major intraday charts look slightly good for the bear.

The daily (D1) chart shows that the price has been heading towards the south at a moderate pace. Considering the last bullish move, the 38.2% level is still intact. However, yesterday’s candle came out as a bearish engulfing candle after an inside bar bullish candle. Thus, the sellers may go short below yesterday’s lowest low. The price may find its next support at the level of 1.76700.

The H4 chart shows that the price made a strong bearish move. Then, it has been choppy for quite a while. It made a breakout at 1.82750 yesterday. The price has had consolidation around the level of 1.81035. The sellers may want to wait for a deep consolidation before going short in the pair. The level of 1.82750 may come as the level of resistance. If the level produces a bearish reversal candle, the sellers may drive the price towards the south upon a breakout at 1.81035.  The price may find its next support at around 1.77000.

The H1 chart looks good for the bear. The price after making a strong bearish move had a bounce at the level of 1.81035. It headed towards the upside and consolidated around the level of 1.82055. At that level, the price has already produced a bearish engulfing candle. If the price heads down and makes a breakout at the level of 1.81035, the sellers may go short in the pair and drive the price towards the south further. The pair may find its next support at around 1.78825. On the other hand, if the level of 1.81035 works as a support level and pushes the price upwards, a breakout at the 1.82055 level may push the price towards the North. It may create good bullish momentum since it would be considered as neckline breakout of a double bottom.