24/02/2020
IMPORTANT DISCLAIMER
The information of this report is of a general nature only. It is not a personal financial advice. It does not take into account your objectives, financial situation and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
EURUSD
Marginally higher was EURUSD last week even if until mid-Friday the trend was clearly bearish. After the announcement of the US manufacturing PMI (50.8 vs expectations of 51.5) and even more after services PMI (49.4 vs expectations of 53) then USD had strong pressures and the pair closed at 1.0849 recovering from the weekly lows of 1.0777 that has dropped on Thursday. This week, besides the coronavirus news which for the moment are negative since the virus appeared strongly in Italy and abroad, there’s also the US GDP on Thursday and the harmonized index of consumer prices in Germany on Friday. This temporary bullish reaction of EURUSD, seems that does not have the strength to push the pair above 1.09 so we’ll open sell positions looking for the downtrend continuation with main target the price area of 1.0750.
GBPUSD
Strong pressures for GBPUSD last week since from 1.3036, dropped last Thursday to 1.2849 and finally we had a strong recovery on Friday, mainly due to disappointing results of the US economy and the weekly close was at 1.2953. On the contrary, the UK manufacturing PMI climbed up to 51.9 while the markets expected a price at 49.7. Also, Brexit returns on the spot because very soon the negotiations between UK and EU will start again. The pair, after the UK elections last December, has entered to a sideways–to–bearish trend and the price area of 1.2770 is very critical because below that level the trend may turn to heavily bearish. This support area will be our main target for our sell positions this week.
USDJPY
Bullish explosion for USDJPY last week which came along with high volatility that we had not seen the last weeks. From 109.85, the pair broke easily the milestone price of 110 and boosted up to 112.22 before performing a correction on Friday and finally closed at 111.56. The economic announcements of Japan were not positive at all with a barrage of negative results regarding GDP, industrial production and manufacturing ΡΜΙ. Even if JPY has many funs and buyers during fear & crisis periods (see coronavirus), USD seems quite strong so we may see the pair above 112 again which will mean an expansion of the uptrend. Our buy positions this week, will target the price area of 113.80 which is a hopeful & distant but realistic target.
EURJPY
Very strong bullish trend for EURJPY last week even if the very first two days were bearish. The fact is that after last Wednesday we saw strong bullish tendencies and from the price area of 118.50, EURJPY climbed above 121 (weekly high at 121.39) and closed marginally above 121 at 121.02. EUR does not have obvious reasons of appearing very strong and JPY may find some buyers as a safe-haven asset since coronavirus has a fast expansion. If we have a clear bearish reaction below 120 then this scenario becomes even stronger and we’ll trust it by opening sell positions for the current week.
EURGBP
Light bullish reaction for EURGBP which started the week from the price area a bit above 0.83 and closed at 0.8371 having achieved during the week to climb above 0.84, up to 0.8415. The long-term trend for the pair is clearly bearish but the 3,5 years support at 0.83 is a very strong barrier for a further drop. The appropriate strategy or us is to open sell positions by taking a possible profit above 0.83.
USDCAD
It was another week of a bearish correction for USDCAD which opened at 1.3250 and closed at 1.3224 without dropping though below 1.32 in any stage. This relative strength of CAD mainly has to do with oil prices rise and with some good economic results of the Canadian economy. Last Friday though, the Canadian retail sales at 0% do not create optimism and the general & long-term sense remains the same regarding the uptrend of the pair. This week, there is the important announcement of the Canadian GDP for the 4th quarter of 2019 on Friday but until then, a bullish breakout of 1.33 will mean the return to the uptrend for good. We’ll open buy positions and we’ll increase the size above 1.33.
USDCHF
After two weeks of bulls, we saw a bearish week for USDCHF which took place on Friday after the disappointing results of the US economy. The pair until last Thursday, starting from 0.9815, had reached 0.9848 but the weekly close was at 0.9782. Having in mind that USD is strong enough, it’s possible to see USDCHF trying to exceed 0.9840 again and in such a case the pair will enter to the well-known channel between 0.9840 and 1:1. We’ll try some buy positions for the current week. First target is of course 0.9840 and second one is at 0.99.
AUDUSD
AUDUSD returned to its bearish trend last week since from 0.6720 we had a free-fall down to 0.6586 and finally the weekly close was at 0.6626. The unemployment rate in Australia was a bit higher at 5.3% in January but the economic damage that is taking place in China due to coronavirus has affected very much the Australian economy & currency. This week, the markets expect to see the results in China (industrial production, retails sales, PMIs) so they can estimate the level of the damage but there are also serious concerns that the Chinese authorities do not reveal the real size of the harm. If we combine all these with the strong USD, we conclude that the drop of AUDUSD should carry on but we have second thoughts because a possible drop may bring the pair to an area that we have not seen for more than 10 years. We’ll stay out this week.
SP500
Bearish was last week for SP500 (losses close to 1.3%) since there are certain concerns that big US companies will have big sales declines in China due to coronavirus. Early this Monday, the Asian markets are all in red and the SP500 futures lose more than -1.4%. Is there’s not fundamental reasons for optimism in the area of the economic consequences of the coronavirus, we may see even stronger corrective trends. Our selection this week is short and we may take profit at the price area of 3,220 points.
DAX30
Bearish week for DAX30 which closed at 13,558 points, having lost about 1.4%. The results of coronavirus seem to touch the German companies as well and early this Monday the losses of DAX30 futures touch 2%. It seems that there’s a strong trend of sellers and without relieving news, it’s very difficult for things to change. Short is our selection for the current week and we may even wait for 13,000 points.
FTSE100
Light losses for FTSE100 last week which closed on last Friday at 7,405 points. The futures of the Index though are currently losing 1.3% and are in alignment with the rest of the markets and the general outlook of panic and uncertainty for the coronavirus expansion. 7,260 points is a critical support level for the Index but a possible bearish breakout may cause realistic bearish target even 7,000 points. We’ll trust this option by opening short positions this week.
Gold
Explosive bullish reaction for gold prices last week. From the price area of $1581.5, it closed above $1,643 with profits circa 4%. This week the uptrend continues with the same tension and already gold is above $1,660. Fears for heavy losses due to coronavirus, red in all stock markets and the general sense of concerns and uncertainty push the investors in buying the most safe-haven asset in the world. Last time we saw such prices was in the beginning of 2013 and only some sells for short-term profit taking or positive news regarding coronavirus may stop the heavy trend for $1,700. Long is our selection this week with wide take profit.
US Oil
Second in a row bullish week for oil prices which closed last Friday at $53.43 with profits close to 1.9%. Early this week, the oil price is dropping heavily around $52.20 since the markets expect a growth slowing due to coronavirus. Many analysts think that the damage has not been reported yet into quantified economic results. Also, there’s no progress regarding the expected production cut from OPEC members. Interest rates in China cut from 4.15% to 4.05% and there are serious concerns for economy slowing with an immediate reflection to oil prices since China is the 2nd oil consumer in the world and the 1st country in oil imports. We’ll open short positions this week and we’ll happy to take profit a bit above $50.
Bitcoin
Sideways trend for Bitcoin last week with a weekly open at $9,926 and a weekly close at $9,965. The most popular cryptocurrency in the world could not exceed $10,000 and already this week is moving even below $9,740 so we see a slowing of the uptrend that has started from the end of last November. A possible breakout of $10,000 will bring back the optimism and maybe will create new buyers that is why we will insist in opening long positions this week as well.
