Fear and panic intensifies

GBPUSD – technical overview

The market has seen a recovery out from the lowest levels since 2016, with the price now pushing back above the weekly Ichimoku cloud to signal a bullish structural shift. Ultimately, only back below the 1.2500 handle would compromise the newly established constructive medium and longer-term outlook. Next key resistance comes in the form of the monthly high from September 2017 at 1.3658, with setbacks expected to be well supported ahead of 1.2800.

• R2 1.3120 – 10 March high – Medium
• R1 1.3000 – Psychological – Medium
• S1 1.2804 – 12 March low – Medium
• S2 1.2726 – 28 February/2020 low – Strong

GBPUSD – fundamental overview

The Bank of England took swift action on Wednesday, coming out with an unscheduled emergency rate cut of 50 bps in response to anticipated coronavirus fallout. Outgoing BOE Governor Carney said the economic shock from the virus could be sharp, though he was also hopeful it would be temporary. Incoming BOE Governor Bailey said the central bank had more room to ease if needed. The UK government also announced a $39 billion stimulus package. Looking ahead, there is no first tier data scheduled in the UK or US and the focus will be on the bigger picture themes.

USDJPY – technical overview

We're seeing a pickup in volatility in the major pair, with the market breaking out of a multi-year triangle. The break to the downside suggests we could now see deeper setbacks below 100.00, towards initial meaningful support in the form of the 2016 low at 98.97.

• R2 105.92 – 10 March high – Strong
• R1 105.00 – Psychological – Medium
• S1 103.00 – Figure – Medium
• S2 101.18 – 9 March/2020 low  – Strong

USDJPY – fundamental overview

It's back to risk off on Thursday, with fear and panic spreading as more extreme measures are taken to combat the coronavirus. Investors were spooked after President Trump announced the US would be suspending all travel from Europe for the next 30 days. The market was already disappointed with the President's aid announcement, given the perceived limited scope. Meanwhile, BOJ Kuroda reassured that the central bank wouldn't hesitate to take appropriate measures as necessary. All of this has translated to renewed downside pressure on the major pair. Looking ahead, the market will continue to monitor the bigger picture developments around the coronavirus. Looking ahead, there is no first tier data scheduled and the focus will be on the bigger picture themes.

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 1.1060 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 1.0542 – 9 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 2009. At this point, there is risk for a full retracement to the multi-year low from 2008, which comes in at 0.6006. At the same time, technical studies are looking stretched and any additional setbacks below 0.6000 should be a difficult task, at least over the coming months. Back above the December 2019 high at 0.7032 would be required to take the immediate pressure off the downside.

• R2 0.6700 – Figure – Medium
• R1 0.6658 – 6 March high – Medium
• S1 0.6434 – 28 February low – Medium
• S2 0.6313 – 9 March/2020 low – Strong

AUDUSD – fundamental overview

Australia's fiscal stimulus package has been overshadowed by the intense wave of risk off flow in markets and this has resulted in renewed downside pressure on the Australian Dollar. Aussie consumer inflation expectations came in as expected but this hasn't factored into price action. Looking ahead, the market will continue to monitor the bigger picture developments around the coronavirus. Looking ahead, there is no first tier data scheduled and the focus will be on the bigger picture themes.

USDCAD – technical overview

The market has been confined to a massive, choppy consolidation, with no clear directional insight. At this stage, it will take a clear break back above 1.3800, or below the 2019 low at 1.2952 for an indication of trend. Until then, look to play the range.

• R2 1.4000 – Psychological – Strong
• R1 1.3821 - 12 March/2020 high – Medium
• S1 1.3609 – 10 March low – Medium
• S2 1.3517 – 9 March low – Strong

USDCAD – fundamental overview

Lots of fireworks for the Canadian Dollar this week, with the collapse in the price of OIL hitting the currency hard. The Canadian Dollar has dropped to its lowest level against the US Dollar since February 2016. Looking ahead, the market will continue to monitor the bigger picture developments around the coronavirus. Looking ahead, there is no first tier data scheduled and the focus will be on the bigger picture themes.

NZDUSD – technical overview

There's a case to be made for a meaningful bottom ahead, with the market looking quite extended as it gravitates back into major psychological support in the 0.6000 area. As such, look for setbacks to be well supported in the days ahead, in anticipation of another rebound. Only a weekly close below 0.6000 would give reason for rethink. Back above 0.6500 would now be required to take the immediate pressure off the downside.

• R2 0.6400 – Figure – Medium
• R1 0.6373 –  6 March high – Medium
• S1 0.6192 – 28 February low – Strong
• S2 0.6014 – 9 March/2020 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar continues to feel the pressure from the deterioration in global risk sentiment. FinMin Robertson has been out commenting that New Zealand's higher interest rate relative to its other global counterparts gives the RBNZ more room to move if additional rate cuts are necessary. Earlier today, Kiwi home sales surged, but this hasn't factored into price action. Looking ahead, there is no first tier data scheduled and the focus will be on the bigger picture themes.

US SPX 500 – technical overview

There have been signs of a major longer term top, after an exceptional run over the past decade. Any rallies from here, are expected to be very well capped, in favour of deeper setbacks targeting an eventual test of the 2018 low at 2339. Rallies should now be well capped ahead of 3200.

• R2 3138 – 3 March high – Strong
• R1 3000 – Psychological – Medium
• S1 2608 – 12 March/2020 low – Strong
• S2 2500 – Psychological – Strong

US SPX 500 – fundamental overview

Although we've seen the market extending to fresh record highs in 2020, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for a meaningful extension of this record run, on easy money policy incentives, should no longer be as enticing to investors as it once was. Meanwhile, tension on the global trade front, geopolitical risk, and worry associated with coronavirus fallout, should weigh more heavily on investor sentiment into 2020. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as the movement here is something that could be a major stress to the financial markets looking out.

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 1800 – Measured move target – Strong
• R1 1703 – 9 March/2020 high – Strong
• S1 1563 – 28 February low – Strong
• S2 1500– Psychological – 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, the coronavirus outbreak, 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 in the 6,000 area, 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 5,750 would compromise the constructive outlook. Back above 10,500 further encourages the bullish prospect.

• R2 11,000– Psychological – Medium
• R1 10,477 – 13 February/2020 high – Strong
• S1 7,603 – 12 March low– Medium
• S2 7,314 – 5 January low – Strong

BTCUSD – fundamental overview

There has been plenty of two way flow with respect to the price of Bitcoin in 2020. On the one side, 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. On the other side, there are many players who aren't willing to look past the shorter term, where bitcoin is still a risk correlated emerging technology.

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 150, in favour of the next major higher low and bullish resumption back towards and through the 2019 high up at 363. Ultimately, only a weekly close below 115 would compromise the outlook.

• R2 287 – 15 February/2020 high – Strong
• R1 253 – 26 February high – Medium
• S1 181 – 12 March low – Medium
• S2 155 – 24 January 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.