Positive vibes into weekly close

Today’s report: Positive vibes into weekly close

Optimism around President Trump's guidelines to reopen the US economy and speculation Gilead may have discovered a treatment drug for the coronavirus have been behind a lot of this latest wave of risk on flow in markets.

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Wake-up call

Chart talk: Technical & fundamental highlights

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EURUSD – technical overview

A higher low is now sought out above the multi-year low from 2017, ahead of the next major upside extension. Look for the major pair to be well supported into dips ahead of the next big run towards the 2019 high at 1.1570. Ultimately, only a weekly close below 1.0700 would compromise this outlook.

  • R2 1.1148 – 27 March high – Strong
  • R1 1.0968 - 13 April high – Medium
  • S1 1.0817 - 16 April low – Medium
  • S2 1.0768 – 6 April low – Medium

EURUSD – fundamental overview

Not a whole lot of movement for the Euro this week. ECB President Lagarde said 'headline inflation will decline in the near-term,' and the central bank 'is prepared to adjust the size and composition of its bond-buying.' Germany agreed to backstop losses of EUR30 bln for commercial credit insurers 'to keep trade flowing and prevent bankruptcies,' and the government will allow some smaller shops to reopen next week, and some schools to reopen in early May. France Finance Minister Le Maire said ESM bailout funds could be used for spending not directly linked to the virus. Key standouts on the Friday calendar include Eurozone inflation, Eurozone construction output, Canada international securities transactions, the US leading index and appearances from BOE’s Haldane and Broadbent.

EURUSD - Technical charts in detail

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 back through 1.3000. 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 1.2600 – Figure – Medium
  • S1 1.2408 – 16 April low – Medium
  • S2 1.2165 – 7 April low – Strong

GBPUSD – fundamental overview

The Pound is trading flat on the week, as we hear to the Friday close. The UK extended its coronavirus lockdown measures for 'at least three more weeks.' IMF Chief Georgieva said 'the UK and EU would be wise not to add more to the uncertainty from the coronavirus by refusing to extend the deadline of their Brexit trade deal negotiations,' though the UK later said it will 'reject any EU request to extend' the transition period. Key standouts on the Friday calendar include Eurozone inflation, Eurozone construction output, Canada international securities transactions, the US leading index and appearances from BOE’s Haldane and Broadbent.

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 in sight, with rallies well capped above 110.00 and dips well supported below 104.00.

  • R2 109.38 – 6 April high – Medium
  • R1 108.52 – 13 April high – Medium
  • S1 106.93 – 15 April low – Medium
  • S2 106.92 – 1 April low  – Strong

USDJPY – fundamental overview

Optimism around President Trump's guidelines to reopen the US economy and speculation Gilead may have discovered a treatment drug for the coronavirus, have helped to bolster risk appetite and the major pair as well in the process. Still, plenty of less optimistic players are reported to be on the offer in the major pair into rallies. Key standouts on the Friday calendar include Eurozone inflation, Eurozone construction output, Canada international securities transactions, the US leading index and appearances from BOE’s Haldane and Broadbent.

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 1.0508 – 16 April/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

Technical studies are in the process of unwinding, after the market traded down to its lowest levels since 2003. There is evidence of a longer-term bottom, though the market will need to break back above the December 2019 high at 0.7032 to take the immediate pressure off the downside.

  • R2 0.6685 – 9 March high – Strong
  • R1 0.6493 – 12 March high – Medium
  • S1 0.6195 – 9 April low – Medium
  • S2 0.5980 – 3 April low – Strong

AUDUSD – fundamental overview

The Australian Dollar is looking to close the week out on a high note, with the currency getting a boost from optimism around President Trump's guidelines to reopen the US economy and speculation Gilead may have discovered a treatment drug for the coronavirus. China softer GDP reads have however dampened things a bit. Key standouts on the Friday calendar include Eurozone inflation, Eurozone construction output, Canada international securities transactions, the US leading index and appearances from BOE’s Haldane and Broadbent.

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 at 1.3665.

  • R2 1.4262 – 6 April high – Medium
  • R1 1.4183 – 16 April high – Medium
  • S1 1.3856 – 13 April low – Medium
  • S2 1.3728 – 16 March low – Strong

USDCAD – fundamental overview

The Canadian Dollar got some help on Thursday from the resurgence in risk appetite and a round of better data, in the form of manufacturing sales. Depressed oil prices and Bank of Canada forward guidance are still however a concern for the Loonie. Key standouts on the Friday calendar include Eurozone inflation, Eurozone construction output, Canada international securities transactions, the US leading index and appearances from BOE’s Haldane and Broadbent.

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 continue to be well supported in the days ahead, in anticipation of additional upside. Only a weekly close below 0.5500 would give reason for rethink.

  • R2 0.6160 – 13 March high – Strong
  • R1 0.6132 –  14 April high – Medium
  • S1 0.5921 – 16 April low – Medium
  • S2 0.5843 – 3 April low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar is feeling better into the weekly close. There has been a wave of optimism around President Trump's guidelines to reopen the US economy and speculation Gilead may have discovered a treatment drug for the coronavirus. Meanwhile, New Zealand is also expected to exit its 4 week lockdown next week. Key standouts on the Friday calendar include Eurozone inflation, Eurozone construction output, Canada international securities transactions, the US leading index and appearances from BOE’s Haldane and Broadbent.

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 have led to an overdue corrective bounce, but rallies should now be well capped ahead of 3000.

  • R2 3000 –  Psychological – Strong
  • R1 2893 – 17 April high – Medium
  • S1 2628 – 8 April low – Medium
  • S2 2433 – 2 April low – Strong

US SPX 500 – fundamental overview

Although we've seen attempts at recovery in response to unlimited QE from the Fed and massive US stimulus, 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, 2012 high), while in the interim, look for any setbacks to be well supported above 1500.

  • R2 1796 – 2012 high – Strong
  • R1 1748 – 14 April/2020 high – Medium
  • S1 1641– 8 April low – Medium
  • S2 1568 – 1 April 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 7,440 – 7 April high – Medium
  • S1 5,660 – 20 March low – Medium
  • S2 3,995 – 13 March/2020 low – Strong

BTCUSD – fundamental overview

Bitcoin has felt the impact of global macro pressures, with the currency falling victim to broad based risk liquidation in Q1 2020. 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 176 – 7 April 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 mostly risk off backdrop, in light of Ethereum's higher sensitivity and correlation with risk themes.

Peformance chart: 5 Day Performance vs. US dollar

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