02/03/2020
EURUSD
Important profits for EURUSD last week which opened at 1.0826 and managed to close above 1.10, at 1.1026. Economic news & announcements were rather neutral from both USA and Eurozone and had just a small impact on the markets since the fears of the coronavirus expansion causes heavy pressures on USD. The statements of Jerome Powell about growth support have been translated by the markets as a probability of new rates cut so the we expect further pressures on USD. This new cut (if it happens) will be the 3rd rates cut within a year and underlines the determination of FED to support the US economy in practise with a further quantitative easing. Also, this week we may see new coronavirus cases which may be translated as a threat for the US consumption which is the 70% of the US GDP. We’ll open buy positions on EURUSD with main target the price area of 1.12. We should also keep our eyes open on the USA Unemployment Rate & NFPs next Friday.
GBPUSD
Bearish was the last week for GBPUSD, which opened at 1.2946 and close at 1.2815 bun on last Friday it dropped until 1.2726. The slowing of the Brexit development process (there is a meeting between officers for UK and EU this Monday but the expectations are poor) presses GBP and send the pair lower. In the Brexit battlefront, the possibility of a no deal Brexit is getting stronger which will cause fears to the GBP friends, at least for the moment. Under this outlook, the Bank of England leaves open the option for further rates cut which means that the support of 1.2760 (close price) which is a 5-years low for the pair will be put to the test. Short positions will be our selection for the current week.
USDJPY
The biggest drop on a weekly percentage basis for the last months, we saw for USDJPY last week. The pair from 111.33, broke easily the milestone price of 110 and closed at 108.05, having lost about 330 pips! The statements from FED with a hint for further rates cut combined with the US 10-years treasury yield which now is in a negative record price of 1.08%, favour even more the scenario for a further drop of the pair. We should not also forget the global concerns regarding coronavirus that fosters more the JPY instead of USD. Despite the general weakness of JPY due to poor macros of the Japanese economy, the fear expansion for pandemics in USA may give a temporary support to JPY. Technically speaking, the price of106.60 is the next strong support for the pair even if in long-term we may see the pair again, exceeding the price area of 110 -112 again. Short is our weekly option though.
EURJPY
A bearish week for EURJPY which lost the milestone price of 120 and closed at 119.16. The investors turned to JPY as a safe–haven asset in between heavy concerns and fears for the coronavirus expansion. Nothing seems to change for the moment and even if early this Monday there is a bullish reaction, the bearish trend seems established so we’ll open sell positions this week, targeting the price area of 118.50 which is the next major support for the pair.
EURGBP
Explosive rise for EURGBP last week, combined with a volatility explosion as well. The pair moved away from the lows of 0.83, closing at 0.86. Problems and concerns regarding Brexit press GBP a lot so we may see even higher prices for EURGBP. Buy positions is our selection for this week, targeting the price area of 0.88.
USDCAD
Strong but expected bullish trend for USDCAD last week after the breaths that had taken and it carried on its uptrend since the weekly open was at 1.3252 and the close at 1.3394. The drop of oil prices was a big helper of this trend. Early this Monday there’s a corrective movement to 1.3350, most likely due to a possible rate cut from FED and due to bullish reactions of oil prices up to $46. The outlook of the pair is mixed though with contrary uptrend and downtrend tensions without a clear winner. Technically speaking, a bearish reaction is more possible that’s why we will select sell positions for this week.
USDCHF
Second in a row bearish week for USDCHF and so the bullish attempt that had started in the beginning of last month came to an end. The pair returned back to the price zone of 0.9650 because USD has been weakened due to coronavirus fears and due to a possibility of rates cut from FED. We will open sell positions, targeting the 1.5 years low prices close to 0.9580.
AUDUSD
Another bearish week for AUDUSD, that closed marginally above 0.65 which is an 11-years low price. FED has left suspicions for new rates cut but after the fears for growth slowing due to coronavirus consequences, we may see rates cut from RBA as well at the next Tuesday session. If it happens, we will see AUDUSD even lower but in the opposite case we may see bullish reaction to 0.66. Early this morning, we had the announcement of the Chinese Caixin Manufacturing PMI at 40.3 vs expectations for 45.7. With such a disappointing result we would expect to see AUD falling but at the time it has a bullish reaction above 0.6530. This fact gives extra fuel to the scenario of the bullish reaction, if course we don’t have surprises from RBA.
SP500
Crash week for SP500 which closed at 2,990 points and losses above 10%. The correction is very strong and it is the shortest period in history in which a 10% correction took place. The panic and the fears regarding coronavirus are obvious and by seeking the next major support we see the price of 2,830 points (target price for our short positions). A possible decline, even temporary, of the consumption in USA is expected to cause extra fears to the investors and to increase the volatility. On the other hand, the liquidity remains high and it has to be routed somewhere when things calm down and volatility drops.
DAX30
A week of a very big drop for DAX30 which lost 12% of its value, dropping easily below 13,000 points and closing even below 12,000 points. Bullish reactions at the DAX futures recover the price above 12,000 points this Monday but it’s extremely difficult at this stage to limit the concerns for a global growth slowing. We will open short positions because we believe that the 11,500 points is a realistic scenario. If markets calm down though, being long on DAX is favored in comparison with the US markets because the fundamentals of the German stocks market are in historic lows compared with the US ones (e.g. Book Value).
FTSE100
On the same wavelength with the other major Indices is FTSE100 which closed at 6,640 points and losses above 10%. The futures of the Index have a bullish trend early this week and the price zone of 6,600 points which is 3.5 years low gives us second thoughts for a further drop so we’d better stay out this week.
Gold
Gold prices until last Friday had small and mild movements, both bullish and bearish around $1,640 – $1,650 but suddenly on Friday we saw a heavy drop that brought gold prices even at $1,563 with a weekly close at $1,586. This movement was completely in contrast with the markets risk mood due to coronavirus and it should be rendered to profit taking and to some gold sells to get a necessary liquidity in order to support the suffering stock markets. One way or another this inapposite movement according to many analysts create a trading opportunity that’s why we remain buyers this week as well.
US Oil
Important loss for oil prices last week with a weekly close at $45.30, almost 15% lower on a weekly basis. At 5 and 6 of March there is the OPEC meeting in Vienna and there are expectations for announcements for further production cut which may cause some bullish trends on the oil prices. Until then, it seems that the markets have found a new equilibrium level at $45 unless the expectations for the production cut act in advance and raise the prices. Long is our selection.
Bitcoin
Big drop for Bitcoin prices last week with losses close to 15% and a weekly close at $8,529. This drop took place on the most of the cryptos and has caused serious concerns to the investors because there were some expectations that the crypto markets will be an alternative investing solution to periods full of panic and fears like the one that we walk in. We didn’t see such a case and it seems that Bitcoin does not have the necessary strength to recover the price of $10,000 soon.
