Panicking into the US Dollar

GBPUSD – technical overview

The price has accelerated to the downside, with the market trading to a 35 year low below 1.1500. Technical studies are now severely extended and warn of an aggressive bounce at a minimum. A push back above 1.2000 over the coming days will encourage prospect for the establishment of a longer-term base and potential double bottom.

• R2 1.2130 – 18 March high – Strong
• R1 1.2000 – Psychological – Medium
• S1 1.1600 – Figure– Medium
• S2 1.1450 – 18 March/+30 year low – Strong

GBPUSD – fundamental overview

The GBP 350 billion stimulus package of loans, grants, and tax cuts to businesses, hasn't been any help to the Pound, which has been crushed. The UK currency has collapsed below 1.2000, all the way down into the 1.1400s, to its lowest levels against the Buck since the 1980s. Despite it being a major currency, the Pound has been weaker than even the commodity currencies over the past week, and a lot of this having to do with missteps at the start of the coronavirus in the UK. Slumping oil prices haven't helped either. Key standouts on Thursday’s calendar include an SNB policy decision, US initial jobless claims, and the Philly Fed.

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, eventually below 100.00, towards initial meaningful support in the form of the 2016 low at 98.97. It would take a clear break back above 110.00 to take the immediate pressure off the downside.

• R2 109.56 – 19 March high – Strong
• R1 109.00 – 13 March high – Medium
• S1 106.76 – 18 March high – Medium
• S2 105.72 – 16 March low  – Strong

USDJPY – fundamental overview

Interesting price dynamics in the major pair, with the Yen failing to rally, despite an intensification of risk off flow. The market is worried about a massive US Dollar funding squeeze and is no longer interested in moving into the Yen, despite risk off. There is growing worry that all of the global stimulus efforts won't be enough this time round. The BOJ offered to purchase JGBs in 2 separate unscheduled operations today totaling Yen1.3 trln. Japanese FinMin Aso said that the government hasn't decided on the size of it's next fiscal stimulus package, but it not considering cash handouts at this time. Key standouts on Thursday’s calendar include an SNB policy decision, US initial jobless claims, and the Philly Fed.

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 1.0542 – 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. It will be interesting to see where things stand as the SNB comes out with its latest policy decision moves.

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 0.6029 – 18 March high – Medium
• S1 0.5702 – 18 March low – Medium
• S2 0.5507 – 19 March/2020 low – Strong

AUDUSD – fundamental overview

The RBA cut the cash rate by 25bps to the lower bound of 0.25%, and provided the guidance that the cash rate won't be increased until there's progress towards their employment and inflation targets. RBA Lowe reiterated the cash rate was now expected to remain at 0.25% for some years. The central bank also opened the conversation on unconventional monetary policy, which was to be expected. More stimulus is expected out of Australia from the fiscal side. Key standouts on Thursday’s calendar include US initial jobless claims, and the Philly Fed.

USDCAD – technical overview

The market has continued to be well supported on dips, extending its run to fresh multi-month highs. The recent push back above the 2017 high now exposes the next upside extension towards a retest of massive resistance in the form of the 2016 high at 1.4690. Look for setbacks to be well supported ahead of 1.3500.

• R2 1.4690 – 2016 high – Strong
• R1 1.4668 - 19 March/2020 high – Medium
• S1 1.4300 – Figure – Medium
• S2 1.4167 – 18 March low – Strong

USDCAD – fundamental overview

The Canadian Dollar continues to struggle mightily on the back of the downturn in global sentiment and massive hit to the price of OIL. Canada PM Trudeau announced stimulus 'worth 3% of Canada's economy' to help deal with the coronavirus. BoC Governor Poloz said the central bank 'will factor in new government fiscal measures into analysis before acting.' The BoC said it will proceed with switch buyback operations for the 10-year sector on March 19th and the 5-year sector on March 23rd. Key standouts on Thursday’s calendar include US initial jobless claims, and the Philly Fed.

NZDUSD – technical overview

There's a case to be made for a meaningful bottom, with the market looking quite extended as it dips 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 0.5969 – 18 March high – Strong
• R1 0.5800 –  Figure – Medium
• S1 0.5600 – Figure – Medium
• S2 0.5469 – 19 March/2020 low – Strong

NZDUSD – fundamental overview

Super thin liquidity conditions and a US Dollar funding squeeze have been behind the latest rout in the New Zealand Dollar. The market is now worrying the RBNZ will be forced to consider a QE initiative. RBNZ Assistant Governor Hawkesby tried to prop sentiment a bit, after saying the banking system had "plenty of cash on hand to meet demand under any circumstances." Key standouts on Thursday’s calendar include US initial jobless claims, and the Philly Fed.

US SPX 500 – technical overview

Setback 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 3000 – Psychological – Strong
• R1 2774 – 12 March high – Medium
• S1 2275 – 18 March/2020 low – Medium
• S2 2200 – Round number – Strong

US SPX 500 – fundamental overview

Although we've seen the market extend 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 additional runs to the topside, 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 in 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 an ongoing stress to 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 1451– 16 March/2020 low – Strong
• S2 1400 – 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, 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 6,470 – Previous Support – Strong
• S1 3,995 – 13 March/2020 low– Strong
• S2 3,215 – 2018 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 253 – 7 March high – Strong
• R1 200 – Psychological – Medium
• S1 90 – 13 March/2020 low – Strong
• S2 83 – 2018 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.