2020-03-31 • Updated
In December 2019, when the FBS Analytical department wrote the forecasts for the upcoming year, no one could predict what would happen in just a month. Covid-19 appeared out of sudden and took the main stage from the endless US-China trade dispute, Brexit worries, and other "less important" stuff. That’s the nature of a black swan – you never know about it until it appears and affects your profit, future, and possibly even your mental health. As today is the last day of the first quarter, let’s look at the performance of the major currency pairs and analyze what may come next for them.
At the beginning of the quarter, when the virus only started its deadly journey in China, the spikes of the risk-off sentiment resulted in the weakness of commodity-linked and other risky currencies. The US dollar, alongside with the Japanese yen, took the lead. However, the situation changed last week, after the US government approved the $3 billion bill to support the economy amid the coronavirus crisis.
In the picture above we can see the change between highs and lows of major currency pairs. We can notice that the most volatile performance was by GBP/USD and USD/CAD. Let's look at both of them.
While the cable continued moving within the long-term downtrend under the 50-month MA, a combination of negative factors managed to pull it to the lowest levels since 1985. Here we can mention coronavirus shock, liquidation of longs after the Parliamentary election, and the late reaction to the pandemic by the British government. As the USD continued to serve as a safe haven for many investors, the British pound dropped against it to 1.1409. Now bulls are trying to push it back to the borders of the descending trendline. On the daily chart, the pair is trading near the 1.24 level.
New quarter’s opportunities: traders need to pay attention to the moves of the USD. The US is a leader in coronavirus cases, so the USD may get weaker on the new measures by the US government and the Fed and disappointing economic data. As a result, the British pound may strengthen.
The Canadian dollar stays under pressure as the oil prices fall. Thus, USD/CAD retested the long-term resistance at 1.4689. On the monthly chart, the pair is well-supported by the 50-day MA and the 1.2960 level.
New quarter’s opportunities: Oil, oil, and oil. The most important driver of the Canadian dollar is the situation in the oil market. Even the recent rate cut by the Bank of Canada did little to the performance of the loonie. Read more about the analysis of oil prices on our website.
In the chart below, we highlighted the quarterly performance of the major currencies. No surprises, the USD/CAD pair was a big winner, while GBP/USD – a heavy loser. It is interesting to look at the "battle of safe havens". Both USD/JPY and USD/CHF did not change a lot, as investors preferred putting capital to the American currency at first. However, the USD rally ended last week with a downside correction, providing opportunities to the Swiss franc and Japanese yen.
We are entering the second quarter of this year with a lot of uncertainties. The pandemic continues, and governments try their best to fight the consequences and to smooth the negative effect of it. However, there is still a ray of hope. We are talking here about the Chinese example. Today, China reported a better-than-expected manufacturing PMI (52 vs. 44.9). Things are getting better there, and production is restored. Let's see how the situation will develop from here in Europe and the USA.
Crude oil futures surged on Monday due to disruptions in Russian refining capacity caused by Ukrainian drone strikes and Moscow's decision to cut output to comply with OPEC+ targets. The West Texas Intermediate (WTI) contract for May settled at $81.95 a barrel, up $1.32, while the Brent contract for May settled at $86.57 a barrel, also up $1.32. Russia instructed...
Bearish scenario: Sales below 80.00 with TP1: 79.60... Anticipated bullish scenario: Intraday purchases above 80.70 with TP: 81.50...
Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...
Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...
Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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