The USD strengthened against a number of its counterparts yesterday as uncertainty remains strong in the markets and for the same reason the greenback was unable to outperform safe haven JPY. It was characteristic of the market’s increased worries after headlines of media were full of US President Trump’s warning late Tuesday of two “painful” weeks ahead for the US, regarding the coronavirus outbreak. As analysts mentioned, given the stark warning from a usually optimistic US President and his 180 degrees turn, many businesses may opt to close and lay off their workers. With only a few data in hand about the questioned period, the situation seems to be worsening for the US economy and some analysts tend to expect a depression. It should be noted that financial data yesterday and especially the ISM Mfg PMI dropped, showing a decrease in economic activity for the US manufacturing sector, yet the drop was contained and not as wide as expected. Focus for the next two days turns to employment data and today the initial jobless claims figure is due out, with another massive figure expected, while markets may allready start preparing for the US employment report, due out on Friday. EUR/USD dropped yesterday breaking the 1.1010 (R2) and the 1.0955 (R1) support lines, both now turned to resistance, now turned to resistance. We maintain a bearish outlook for the pair, as its price action remains below the downward trendline incepted since the 27th of March. Should the bears actually remain in charge of the pair’s direction, we could see EUR/USD breaking the 1.0890 (S1) and aim for the 1.0835 (S2) support line. Should the bulls take over, we could see the pair breaking the 1.0955 (R1) resistance line, the prementioned downward trendline and aim if not break the 1.1010 (R2) resistance level.
AUD remains steady yet worries persist
AUD remained largely steady against the USD yesterday, under pressure, as markets tended to maintain a wait and see position. Uncertainty runs high for the commodity currency, as forecasts for a prolonged economic slowdown could have a wider adverse effect on the Australian economy and currently may be reducing the risk appetite of the market, as well as Aussie’s attractiveness. Worries among economists also tend to be directed towards a possible ballooning of the Australian government’s budget deficit, which could push the national debt considerably higher. Please note that RBA’s meeting on the 7th of April could shed more light on the situation, yet we may see the bank remaining in a wait and see position after the recent easing of its monetary policy. It was characteristic of the situation that the Aussie failed to gain even at the better than expected figures for the Chinese PMIs. Despite market focus being on the coronavirus outbreak, we tend to note tomorrow’s release of Australia’s retail sales in a rather light calendar for AUD. AUD/USD after its slight drop in the European session, maintained a sideways motion around the 0.6075 (S1) support line. We maintain our bias for a sideways motion, yet financial releases and coronavirus worries could alter the pair’s direction. Should the pair’s long positions be favoured by the market, we could see it breaking the 0.6180 (R1) resistance line and aim for the 0.6280 (R2) resistance hurdle. On the flip side, should the pair come under the selling interest of the market, we could see it breaking the 0.6075 (S1) support line and aim for the 0.5980 (S2) support level.
Other economic highlights today and early tomorrow
In the European session we get UK’s nationwide house prices for March and Eurozone’s producer prices index for February. In the American session we get the US initial jobless claims figure for the week ended on the 28th of March, the US factory orders growth rate for February and Canada’s trade data for February. During Tomorrow’s Asian session, we get Australia’s retail sales growth rate for February and China’s Caixin services PMI for March.
EUR/USD 4 Hour Chart
Support: 1.0890 (S1), 1.0835 (S2), 1.0775 (S3)
Resistance: 1.0955 (R1), 1.1010 (R2), 1.1060 (R3)
AUD/USD 4 Hour Chart
Support: 0.6075 (S1), 0.5980 (S2), 0.5900 (S3)
Resistance: 0.6180 (R1), 0.6280 (R2), 0.6385 (R3)
