USD remains strong

The USD remained strong and gained against a number of its counterparts especially emerging market currencies during today’s Asian session. According to analysts there are fresh declines in stock futures as they hit limit downs while at the same time US treasuries are in on the rise while yields are on the retreat. Market worries about a situation with a tight liquidity in the midst of the evermore worsening coronavirus crisis may have accelerated the demand for cash. It was especially worrisome as St. Louis Fed President Bullard predicted that the US unemployment rate may hit 30% in the second quarter of the year due to shut downs of businesses while at the same time called for an even greater fiscal stimulus. As he mentioned, regarding the Fed, “everything is on the table”, showing the readiness of the bank to support the US economy. Should uncertainty continue to rise as an increasing number of US citizens is ordered to stay at home, we could see the USD getting further support. AUD/USD dropped on Friday and after breaking a number of support lines, turning them to resistance, early during today’s Asian session tested the 0.5710 (S1) support line, yet the support line held its ground. We maintain a bias for a sideways motion as the pair seems to have broken the downward trend line incepted since the 11th of March. Should the pair come under the selling interest of the market once again, we could see the pair breaking the 0.5710 (S1) support line and aim for the 0.5630 support level. Should the pair’s long positions be favoured by the market, we could see it breaking the 0.5810 (R1) resistance line and aim for the 0.5900 (R2) resistance level.

Worries for the GBP intensify

Worries seem to intensify about the GBP as the coronavirus outbreak seems to be getting worse in the UK. UK’s PM warned that there could be “tougher measures”, which could also include a full lockdown should UK citizens continue to ignore public warnings and the government’s recommendations. PM Johnson also stated that he will be considering all options available in the next 24 hours, while at the same time there seem to be plans to fast track emergency powers through the UK parliament. Should uncertainty and dark clouds continue to surround the pound we could see it weakening once again. After Friday’s short rally, GBP/USD relented any gains made and tested the 1.1570 (S1) support line. We maintain a bias for a sideways motion for the pair as its movement seems to be confined between the 1.1715 (R1) and the 1.1570 (S1) in the past 12 hours, while on a wider scale, between the 1.1450 (S2) and the 1.1880 (R2) levels. Should the bears take over, we could see cable breaking the 1.1570 (S1) and aim for the 1.1450 (S2) support level, if not lower. If the bulls take over, the pair could break the 1.1715 (R1) and aim for the 1.1880 (R2) resistance levels.

Other economic highlights today and early tomorrow

Today during the American session, we get from Canada the wholesales for January and Eurozone’s preliminary consumer confidence for March. During tomorrow’s Asian session we get Australia’s preliminary PMIs for March as well as Japan Jibun Mfg PMI’s preliminary reading also for March.

As for the rest of the week

On Tuesday, we get the preliminary PMI readings concerning March for France, Germany, the Eurozone, UK, and US, along New Zealand’s trade balance. On Wednesday, we get Germany’s Business climate for March, UK’s inflation rates for February and the US durable goods orders growth rates for February. On Thursday, we get Germany’s GfK consumer Sentiment for April, UK’s retail sales for February, from the Czech Republic CNB’s interest rate decision and from the US the final GDP rate for Q4. On Friday, we get the US core PCE prices and the consumption rate, both for February, along with the final Michigan Consumer Sentiment for March.

AUD/USD 4 Hour Chart