Forex Update – April, May & June 2020

***Coronavirus fears are driving markets – cash fleeing to safe-haven currencies (CHF, JPY). Stock markets down***

AUDUSD – Daily & Weekly Charts

As suggested in our last Forex update, AUDUSD has continued to be bearish and move lower. Price is clearly down-trending on both the daily and weekly time-frames. The moving averages on both time-frames are bearish and widening, suggesting that the downside direction could continue. AUDUSD is currently in a retrace move after a strong sell-off.

Selling opportunities may exist around the dynamic resistance of the moving averages, around the 38.2%, 50.0% and 61.8% Fib retrace levels, around the weekly trend resistance and around the horizontal levels at 0.6660 and 0.7020. An attempt to swing lower could stall or reverse around the recent swing low at 0.5740.

The Reserve Bank of Australia (RBA) cut rates again in their March 2020 meeting. Rates were cut by another 0.25%, bringing the official bank rate to 0.50% (a record low). The current low rate is needed to help reduce the unemployment rate, stimulate economy and counter the negative economic impact of coronavirus. It is likely that official rate will stay low and may even be cut further. The US Federal Open Market Committee (FOMC) has unexpectedly cut rates by 150 points due to heightened concerns regarding the coronavirus outbreak. The current Fed Funds rate is currently 0.25%, back at post-2008 levels. There is some concern that keeping rates low could cause greater issues in the US’ financial sector.

EURGBP – Daily & Weekly Charts

EURGBP has reversed at both the support and resistance areas of the weekly range (as suggested in our last Forex update). Price continues to move sideways and range between the weekly support at 0.8300 and the weekly resistance at 0.9325. The daily and weekly moving averages both confirm the current indecision – they are tight and moving sideways.

Trading opportunities could exist around the support and resistance areas of the range and if EURGBP moves out of the range (break-out trade). An attempt to break to the upside may find resistance around the daily resistance at 0.9430 and also around the psychological level of 1.000. A break to the downside may find support around the weekly horizontal support levels at 0.7585 and 0.6930.

The Bank of England (BOE) has followed other central banks and has cut rates to combat economic challenges caused by coronavirus. The UK interest rate is now set at 0.25%. The UK has now left the EU, meaning that Brexit uncertainty should weigh less heavily on the Pound. The European Central Bank (ECB) continue to keep rates at the record low of 0.00%. Due to weak trade growth and economic forecasts, rates are likely to stay low for the foreseeable future.

EURUSD – Daily & Weekly Charts

Price has recently been down-trending on the daily time-frame but is now looking choppy and indecisive. The EURUSD continues to be indecisive on the weekly time-frame and is ranging between 1.0430 and 1.2450. The daily and weekly moving averages confirm the overall market indecision – they have been crossing frequently and are moving sideways.

Trading opportunities may exist around any of the daily horizontal levels (1.0650, 1.0785, 1.1240 and 1.1400), around the support and resistance areas of the weekly range and if EURUSD moves out of the weekly range (break-out trade).

The European Central Bank (ECB) continue to keep rates at the record low of 0.00%. Due to weak trade growth and economic forecasts, rates are likely to stay low for the foreseeable future. The US Federal Open Market Committee (FOMC) has unexpectedly cut rates by 150 points due to heightened concerns regarding the coronavirus outbreak. The current Fed Funds rate is currently 0.25%, back at post-2008 levels. There is some concern that keeping rates low could cause greater issues in the US’ financial sector.

GBPUSD – Daily & Weekly Charts

As suggested in our last Forex update, price has continued to downtrend and move lower. GBPUSD is down-trending on both daily and weekly time-frames. Price is currently retracing some of the recent sell-off. The weekly moving averages are bearish and steady, signalling that the trend may continue. The daily moving averages are signalling market indecision though.

Shorting opportunities could exist around any of the key Fib levels, around the daily and weekly moving averages, around the weekly trend resistance area and around the horizontal levels at 1.2760, 1.3095 and 1.3255. A bearish move may be rejected or reverse around the horizontal support levels at 1.2015 and 1.1485.

The Bank of England (BOE) has followed other central banks and has cut rates to combat economic challenges caused by coronavirus. The UK interest rate is now set at 0.25%. The UK has now left the EU, meaning that Brexit uncertainty should weigh less heavily on the Pound. The US Federal Open Market Committee (FOMC) has unexpectedly cut rates by 150 points due to heightened concerns regarding the coronavirus outbreak. The current Fed Funds rate is currently 0.25%, back at post-2008 levels. There is some concern that keeping rates low could cause greater issues in the US’ financial sector.

NZDUSD – Daily & Weekly Charts

The NZDUSD has been bearish (as suggested in our last Forex update). Price continues to downtrend and move lower. NZDUSD was moving within a weekly bearish channel but has recently closed below the channel support area, gauging the strength of the current bearish momentum. The daily and weekly moving averages are both bearish and widening, signalling that the downtrend could continue. Price is currently retracing some of the recent sell-off.

Opportunities to go short may exist around any of the key Fib levels, around the dynamic resistance of the daily and weekly moving averages, around the support and resistance of the previous weekly bearish channel and around the horizontal levels at 0.6265, 0.6775 and 0.6915. A bearish move could find support and even reverse around the previous bearish channel support area and around the recent lows at 0.5620.

The Reserve Bank of New Zealand (RBNZ) continue to keep rates at the record low of 1.00%. Due to poor economic indicators, there are no forecast rate hikes in the near future but further cuts are currently being disregarded for the remainder of 2020. The US Federal Open Market Committee (FOMC) has unexpectedly cut rates by 150 points due to heightened concerns regarding the coronavirus outbreak. The current Fed Funds rate is currently 0.25%, back at post-2008 levels. There is some concern that keeping rates low could cause greater issues in the US’ financial sector.

USDCAD – Daily & Weekly Charts

As suggested in our last Forex update, the USDCAD closed above the consolidation area and has since been bullish. As also suggested, price is now reversing off the horizontal resistance at 1.4585. USDCAD is ranging on the weekly time-frame (1.1995-1.4585) but is showing signs of growing upside momentum – bullish moving averages and higher swing highs and lows. The daily time-frame shows a clear uptrend. Price is currently retracing some of the recent bullish move.

Buying opportunities could exist around the 38.2%, 50.0% and 61.8% Fib levels, around the dynamic support of the daily and weekly moving averages, around the weekly diagonal support area and around the horizontal levels at 1.3705, 1.3535 and 1.3345. A bullish move may stall or reverse around the horizontal resistance levels at 1.4500 and 1.4585.

The US Federal Open Market Committee (FOMC) has unexpectedly cut rates by 150 points due to heightened concerns regarding the coronavirus outbreak. The current Fed Funds rate is currently 0.25%, back at post-2008 levels. There is some concern that keeping rates low could cause greater issues in the US’ financial sector. The Bank of Canada (BOC) has followed the US and has cut the interest rates to help boost the economy during the coronavirus pandemic. The current rate is now 0.75%. The economy is currently performing well and inflation targets are currently at their potential. If coronavirus fears de-escalate, the BOC could increase rates again.

USDCHF – Daily & Weekly Charts

Price has reversed around the weekly horizontal channel support area (as suggested in our last Forex update). USDCHF continues to be indecisive and lack trend direction. Price is clearly moving sideways within a horizontal channel on the weekly time-frame (0.9150-1.0300). The moving averages confirm the current indecision – they have been crossing frequently and are also moving sideways.

Trading opportunities may exist around any of the daily levels at 0.9270, 0.9890, 1.0005 and 1.0205, around the support and resistance areas of the weekly horizontal channel and if USDCHF moves out of the channel (break-out trade). A break to the downside could find support around 0.8585.

The US Federal Open Market Committee (FOMC) has unexpectedly cut rates by 150 points due to heightened concerns regarding the coronavirus outbreak. The current Fed Funds rate is currently 0.25%, back at post-2008 levels. There is some concern that keeping rates low could cause greater issues in the US’ financial sector. The Swiss National Bank (SNB) continues to keep rates at the all-time low of -0.75%. The Swiss economy continues to be stagnant but has been showing signs of positive momentum. The Swiss Franc continues to be highly valued, especially due to the current global uncertainties around Brexit and the US. The SNB has announced that it will continue to intervene with in foreign exchange markets but will likely keep rates unchanged until at least 2021.

USDJPY – Daily & Weekly Charts

As suggested in our last Forex update, price has been finding support around the weekly horizontal channel support area. USDJPY continues to be choppy and indecisive on both daily and weekly time-frames. Price is still moving within a tight weekly horizontal channel at 103.90-114.15. The moving averages confirm the market indecision – they are tight and crossing frequently.

Trading opportunities could exist around the support and resistance areas of the weekly horizontal channel and if USDJPY moves out of the channel (break-out trade). A break to the upside may find resistance around 117.80 and 125.60. A break to the downside may find support around 100.35.

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