Extended lockdowns unsettle markets

GBPUSD – technical overview

The market has rebounded sharply, after collapsing to a +30 year low below 1.1500. This supports the longer-term constructive outlook, with a major bottom sought out ahead of the start to a big run to the topside. Look for the major pair to hold up above 1.2000 on a monthly close basis for confirmation.

• R2 1.2625 – 13 March high – Strong
• R1 1.2486 – 27 March high – Medium
• S1 1.2242 – 31 March low – Medium
• S2 1.2130 – 27 March low – Strong

GBPUSD – fundamental overview

Data out of the UK this week has come in largely as expected, with Tuesday's GDP reads followed up by Wednesday's consensus manufacturing PMIs. Overall, the Pound has been better bid, mostly on the back of more favourable yield differentials with the US Dollar in the aftermath of the Fed's decision to commit to unlimited QE. The Pound is also the only major currency that isn't as stressed about the prospect of currency appreciation. Key standouts on Thursday’s calendar include US trade, US initial jobless claims, and US factory orders. There is no first tier data out of the UK.

USDJPY – technical overview

We're seeing a pickup in volatility in the major pair, with the market swinging wildly through the upper and lower bound of a massive triangle. Still, there is no clear direction insight, with rallies well capped above 110.00 and dips well supported below 104.00.

• R2 109.72 – 27 March high – Medium
• R1 108.73 – 31 March high – Strong
• S1 106.92 – 1 April low – Medium
• S2 106.76 – 18 March low  – Strong

USDJPY – fundamental overview

We continue to see renewed Yen demand this week, with the price action attributed to traditional correlations between the Yen and risk off flow. Coronavirus fallout concerns are a primary driver behind the downturn in sentiment and concurrent Yen demand. Data out of Japan has also been discouraging this week. PM Abe has proposed a record Yen 60 trillion stimulus package. Key standouts on Thursday’s calendar include US trade, US initial jobless claims, and US factory orders.

EURCHF – technical overview

The market remains very well capped into offers and the medium-term picture continues to favour the downside. A break back above 1.0710 would be required to take the immediate pressure off the downside. Technicals are however looking extended and the market should be well supported ahead of 1.0500.

• R2 1.0834 – 13 January high – Medium
• R1 1.0710 – 3 March high – Strong
• S1 1.0524 – 20 March/2020 low – Medium
• S2 1.0500 – Psychological – Strong

EURCHF – fundamental overview

The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook, and from a US administration that has put Switzerland on its currency manipulator watchlist. Any signs of risk liquidation in 2020, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.

AUDUSD – technical overview

Aussie has recently extended declines to its lowest levels against the Buck since 2003. At the same time, technical studies are looking stretched and any additional setbacks below 0.5500 should be a difficult task, at least over the coming months. Back above the December 2019 high at 0.7032 would however be required to take the immediate pressure off the downside.

• R2 0.6326 – 13 March high – Strong
• R1 0.6201 – 27 March high – Medium
• S1 0.5870 – 26 March low – Strong
• S2 0.5664 – 20 March low – Medium

AUDUSD – fundamental overview

The Australian Dollar has pulled back from recent recovery highs, with the currency suffering from a resumption of risk off flow, as coronavirus fallout fears work back into the mix. The RBA has offered to purchase up to AUD2 bln of government bonds today, spanning maturities from Apr 2024 to Nov 2027. Aussie business confidence reads slumped to an 11 year low. Key standouts on Thursday’s calendar include US trade, US initial jobless claims, and US factory orders.

USDCAD – technical overview

An intense market rally has stalled out just ahead of the 2016 high. At this stage, there is risk for a more meaningful period of correction, with potential for setbacks to extend back down towards previous resistance turned support, in the form of the 2018 high.

• R2 1.4483 – 25 March high – Medium
• R1 1.4350 – 31 March high – Strong
• S1 1.3922 – 27 March low – Medium
• S2 1.3728 – 16 March low – Strong

USDCAD – fundamental overview

Economic data out of Canada hasn't been encouraging this week. On Tuesday, Canada GDP came in softer than expected, while industrial product prices were also below forecast. Then on Wednesday, Canada manufacturing PMIs were a big miss, while Canadian FinMin Morneau didn't help matters, saying the government's new wage subsidy program would cost C$71bln. The Loonie has however managed to find some demand into setbacks, with hope building for some form of a rebound in the price of OIL. Key standouts on Thursday’s calendar include Canada trade, US trade, US initial jobless claims, and US factory orders.

NZDUSD – technical overview

There's a case to be made for a meaningful bottom, with the market looking quite extended after dipping below major psychological support at 0.5500. As such, look for setbacks to be well supported in the days ahead, in anticipation of sharp rebound. Only a weekly close below 0.5500 would give reason for rethink. Back above 0.6500 however, would be required to take the immediate pressure off the downside.

• R2 0.6160 – 13 March high – Strong
• R1 0.6070 –  27 March high – Medium
• S1 0.5777 – 26 March low – Strong
• S2 0.5589 – 23 March low – Medium

NZDUSD – fundamental overview

The New Zealand Dollar has retreated off recent recovery highs, with the currency suffering from renewed global fear associated with coronavirus fallout. FinMin Robertson's comment earlier this week that government net debt will rise to well over 25% of GDP, hasn't helped Kiwi's cause either. Meanwhile, the RBNZ has announced the establishment of a new longer-term funding scheme for the banking system. RBNZ Deputy Governor Bascand has also announced the RBNZ has reached an agreement with NZ banks that there will be no dividend payments on ordinary shares and they should not redeem non-CET1 capital instruments. Key standouts on Thursday’s calendar include US trade, US initial jobless claims, and US factory orders.

US SPX 500 – technical overview

Setbacks have been intense as the market puts in a longer-term top. The market has collapsed through the 2018 low, with the next major support coming in at the 2016 low around 1800. Extended readings warn of a corrective bounce, but rallies should now be well capped ahead of 2800.

• R2 2774 – 12 March high – Strong
• R1 2645 – 31 March high – Medium
• S1 2397 – 25 March low – Medium
• S2 2182 – 23 March/2020 low – Strong

US SPX 500 – fundamental overview

Although we've seen attempts at recovery in response to unlimited QE from the Fed and a $2 trillion US stimulus package, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for additional runs to the topside, on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, tension on the global trade front, geopolitical risk, and ongoing worry associated with coronavirus fallout, should weigh more heavily on investor sentiment in 2020.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, and suggests the market is in the early stages of a bullish move that follows a multi-month consolidation. The next major level of resistance comes in around 1800 (measured move extension target), while in the interim, look for any setbacks to be well supported above 1500.

• R2 1703 – 9 March/2020 high – Strong
• R1 1645 – 26 March high – Medium
• S1 1558– 24 March low – Medium
• S2 1451 – 16 March/2020 low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, coronavirus fallout, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

BTCUSD – technical overview

Setbacks should be very well supported ahead of the 2018 low, with a higher low sought out in favour of a bullish continuation back above the 2019 high and towards the record high from late 2017 further up. Ultimately, only a weekly close below 5,000 would compromise the constructive outlook. Back above 10,500 further encourages the bullish prospect.

• R2 10,477– 9 February/2020 high – Strong
• R1 7,000 – Round number – Medium
• S1 5,660 – 20 March low – Medium
• S2 3,995 – 13 March/2020 low – Strong

BTCUSD – fundamental overview

Bitcoin is finally feeling the impact of global macro pressures, with the new currency falling victim to broad based risk liquidation. However, despite the recent slide, there continues to be good demand from players looking out to the medium and longer term, who see Bitcoin as a safe haven, store of value asset.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market is in the process of attempting to establish a meaningful base after stalling out in the latter half of 2019. Look for setbacks to be well supported above the 2018 low, in favour of another big bounce, eventually back towards and through the 2019 high up at 363.

• R2 200 – Psychological – Strong
• R1 153 – 20 March high – Medium
• S1 100 – Psychological – Strong
• S2 90 – 13 March/ 2020 low  – Strong

ETHUSD – fundamental overview

While there is plenty of Ether demand built up, with so much optimism around prospects for the blockchain, given all of the development going on in the decentralised finance space, macroeconomics will likely play a negative role in 2020, with Ether expected to underperform in a risk off backdrop, in light of Ethereum's higher sensitivity and correlation with risk themes.