16-Apr-2020

1) FTSE 100 Struggles In Early Trading
2) USD/CAD Pierces Bullish Flag but Caution Remains
3) GBP/USD Forecast: Ready to Recover?
4) EUR/CAD: Is The Bull Going To Take Control?

1) FTSE 100 Struggles In Early Trading

A brighter update from easy Jet has lifted airline shares in London, but overall the FTSE 100 is struggling to move higher.

European indices have moved higher in early trading, although gains in London are more muted. A surprisingly-strong Australian employment report has provided a glimmer of light, although the rise in jobs is more down to the number of citizens taking jobs in supermarkets and supply chains, rather than any en-masse return to normality. US markets took a knock yesterday but managed to end the day off their lows despite a poor day for oil and financial stocks, while once again it was big tech that has led the way higher. Without this to aid the index, the FTSE 100 continues to struggle, with the index resuming its fall despite a rally overnight for the futures. Today is expected to see the renewal of lockdown measures for the UK, even as the narrative surrounding the infection and death curves continues to improve.

Airlines were at the top of the FTSE 100 this morning, thanks to a cautiously-optimistic outlook from the budget airline easy Jet. Having secured funding to see it through the current disruption, the firm expects to be able to weather the grounding of its planes, while signs of hope are seen in the high level of winter bookings. Perhaps we will see a rebound in consumer spending once the crisis has passed, if Britons are planning to go abroad to capture some winter sun. Easy Jet shares have rallied by around 4% in early trading, with IAG up by a similar amount.

2) USD/CAD Pierces Bullish Flag but Caution Remains

USDCAD bounced aggressively by 1.6% on Wednesday to close slightly above the 1.4100 level and the descending channel that seems to be part of a bullish flag pattern.

While the move brought hopes that the trend could improve, the momentum indicators have yet to show clear positive signals. The MACD remains stable below its red signal line, the RSI is shifting south after breaking its 50 neutral mark, and the red Tenkan-sen line continues to hold a downside direction below the blue Kijun-sen.

In case the bears dominate, the surface of the channel seen around 1.4040 should act as resistance to keep the focus on the upside. Otherwise, a drop back into the channel could boost selling pressure probably until 1.3934, which is the 50% Fibonacci retracement of the upleg from 1.3200 to 1.4667. Below the previous low of 1.3854, the door would open for the 50-day simple moving average (SMA) and the 61.8% Fibonacci of 1.3760.

In the positive scenario where the price overcomes the 38.2% Fibonacci of 1.4100 and the middle Bollinger band, the 1.4216 nearby resistance could attempt to halt the move towards the 23.6% Fibonacci of 1.4320. Another winning battle at 1.4320 could add more fuel to the rally, bringing the upper Bollinger band currently at 1.4446 and the 1.4500 mark next into the view.

Meanwhile in the medium-term picture, the pair continues to trade within bullish waters as long as it holds above 1.3500.

Summarizing, USDCAD continues to face downside risks despite completing, though not clearly, a bullish flag pattern. A decisive move above 1.4100 could raise positive sentiment, while a pullback below 1.4040 may confirm additional losses.

3) GBP/USD Forecast: Ready to Recover?

“The virus would run rampant if all restrictions are lifted” – these words by UK Health Secretary Matt Hancock are no surprise to investors, who are already bracing for an extended closure.

While there are signs that British coronavirus cases and deaths are peaking – or at least plateauing – the country shuttered its economy late and will likely see have to wait longer before lifting the lockdown. The government will likely extend restrictions for another three weeks, and we see a “buy the rumor, sell the fact” response supporting sterling.

Prime Minister Boris Johnson continues recovering from his near-death coronavirus experience but he is probably in touch with Foreign Secretary Dominic Raab who is deputizing for him and with other ministers.

COVID-19 may have also peaked in the US – according to figures in New York state and President Donald Trump, who will later publish guidelines about reopening the economy. The decision rests with governors, who will have to balance health and economic concerns.

GBP/USD has pressured by safe-haven flows to the US dollar – a response to the economic damage inflicted by the stay-at-home orders. Retail sales plunged by 8.7% in March – worse than expected and perhaps only a preview for devastating statistics in April.

The Federal Reserve’s Beige Book, industrial output, and the historically low NY Fed Manufacturing Index all contributed to the gloom. The focus today is on weekly jobless claims, which are expected to exceed five million in the week ending on April 10. Together with continuing claims, the number of those unable to find work may exceed 20 million.

See Jobless Claims Preview: Facts that retain the ability to move markets

Many Brits and markets participants may wish for the days of Brexit anxiety to return – preferring that topic over coronavirus. Negotiations about future EU-UK trade relations have resumed via video after Chief EU Negotiator Michel Barnier recovered from COVID-19.

The first talks after the long break were friendly according to reports. The topic is still on the backburner but may return to the forefront. News suggesting progress may boost the pound while acrimony may send it lower.

4) EUR/CAD: Is The Bull Going To Take Control?

EUR/CAD produced two bullish candles consecutively on the daily chart. The daily traders are to wait for the price to consolidate and get a bullish reversal candle to push the price towards the North. However, major intraday charts such as the H4 and the H1 look good for the buyers. The price has been in a bearish correction on the intraday charts. It may make a bullish move upon finding its support followed by a breakout at yesterday’s highest high.

The daily (D1) chart shows that the price had a bounce at 1.51500. It produced a bullish inside bar followed by another bullish candle. The price had a rejection at 1.54105 yesterday. Thus, the daily buyers are to wait for the price to consolidate first and then a bullish breakout at that level. Meanwhile, they are to wait and watch patiently. Since the daily chart produced two consecutive bullish candles, the H4 chart looks good for the buyers. Let us have a look at the H4- EUR/CAD chart.

The H4 chart shows that after making a bullish move, the price had a rejection at 1.54105 and started having a bearish correction. The price has been heading towards the South. The level of 1.53115 may work as a level of support and hold the price. If the level produces a bullish reversal candle, the buyers may wait for the price to make a breakout at 1.54105 to go long on the pair. The price may find its next resistance at 1.55800. On the contrary, if the level is breached, the price may head towards the 1.51800 to find its support.

The H1 chart shows that after being bullish, the price had a rejection at 1.54105 and produced a double top. It made a bearish move and found its support at 1.53455. The price made a breakout at the level earlier. Thus, the buyers may keep their eyes on the pair to get a bullish reversal candle at the level to push the price towards the North. The price may find its next resistance at 1.54105. In case of a bearish breakout, the price may head towards the South and find its support at 1.52500.