Amplitude of the last 5 days (high-low): 166p – 152p – 234p – 243p – 326p.
Average volatility over the past 5 days: 225p (high).
The pair spent the last trading day of the week all in the same highly volatile movement, fortunately for the euro, there was no collapse. At the beginning of Friday, March 20, the euro/dollar tried to correct, but this attempt failed, and the downward movement resumed in the afternoon. Needless to say now, bulls are extremely weak? We presented this wording to traders when no one really knew about any coronavirus, and the euro became cheaper against the US currency for periods. So that you understand the scale of the differences, the euro fell two cents with the continued downward trend against the dollar for the whole of 2019. At eight cents over the past seven trading days. This is all you need to know about the realities of the foreign exchange market at this time. Panic does not subside either from the foreign exchange market, or from the stock market, or from the commodity market. Coronavirus continues to spread across the planet and invade europe. There are no good reasons and reasons to expect the end of this chaos in the near future. This means that market participants can only hope that the passions at least slightly subside, because it is extremely difficult to trade the pair in current conditions.
Looking at the map of the spread of the COVID-2019 virus and the number of officially infected people becomes really sad and scary. According to data for March 21, 2020, the total number of infections is 275,000. It seems that the rate of growth of the epidemic is only increasing. 88,000 citizens managed to recover at the same time, and more than 11,000 died. However, the worst thing is still that the virus is extremely easily transmitted between people. According to the latest information from scientists, coronaviru” can live up to three days on plastic and metal. Thus, if an infected person touches, for example, the handrail of an escalator in a shopping center, this handrail can become a new source of infection for the entire area. In this case, from our point of view, the closure of borders will not help, the authorities can be said to be too late. If the virus is already in the country, it will spread almost in any case. And most importantly, 275,000 infected people are official data. That is, first, provided by the governments or relevant services of countries. It is no secret that many governments are unwilling to disclose the real extent of the epidemic on their territory. Therefore, the actual figures for this one item alone can be much higher. Moreover, no one takes into account the number of infected people in poor countries, in cities with a high population density but a low standard of living. After all, not all seven billion people passed the test for coronavirus and only 275 thousand were infected. Thus, we will not be surprised if the real number of the disease is already approaching a million.
In Europe, the focus of infection is still Italy. According to the latest data, 47 thousand people have become infected and more than 4,000 have died. In terms of mortality, the country has surpassed China’s one and a half billion. The Italian government has said that additional quarantine measures may be introduced in the near future, such as banning any outdoor activities. The Governor of Lombardy, Attilio Fontana, as well as the mayors of some other Italian cities, asked for help from the army in order to ensure that the population complies with the quarantine regime.
Unfortunately, the US stock indexes continue to disappoint. At Friday’s close, the Dow Jones lost 4.5%, the S&P 500 lost 4.3%, and the NASDAQ lost 3.8%. Thus, we see that the measures taken by the Federal Reserve and the US government to inject huge amounts of cash into the economy have not yet given it any support. The hardest hit is the shares of the Boeing company, which lost more than 36% over the week.
The price of oil showed signs of life on Friday, but, unfortunately, it was not for long. Brent crude fell to $ 27.31 per barrel on Friday, WTI-to $ 20.00 per barrel. Forecasts of world rating agencies and banks are disappointing. Oil will continue to fall in price if the crisis caused by the global epidemic is not overcome. Weighted average forecasts for the oil market are 15-20$ per barrel.
There were times, not so long ago, when currency pairs reacted to macroeconomic statistics, and the decision of any central bank to lower or raise the rate by 0.25% was a loud event for the market. Now, central banks lower rates almost every week, and the Fed has the opportunity to ease monetary policy by 1% at once. Not to mention the huge volume of quantitative stimulus programs and a number of other financial programs, each of which involves injecting money into the economy. However, all these events have a very indirect impact on traders. Market participants, both large and small, continue to try to transfer their funds and assets to the most secure instruments. In the currency market, according to everyone’s opinion, the most secure instrument is the US dollar. Therefore, despite the fact that the euro has lost more than 800 points against the dollar in the last seven days alone, and the pound – more than 1500 points in the last ten days, the US currency is still in demand. Any macroeconomic statistics do not matter now. By the way, there were no macroeconomic publications either in the European Union or in the United States on Thursday and Friday. However, many traders are interested in what will be the reduction of the main macroeconomic indicators in the eurozone and the US. Obviously, the cuts will be huge, but no one knows the real numbers yet. Data will begin to arrive in early April for most of the main indicators of the state of the economy…
From a technical point of view, the euro/dollar pair slightly corrected on Friday, but by the end of the day began to show signs of a resumption of a downward trend. Thus, the next week may well be another failure for the euro. Nevertheless, we still believe that panic can move any currency pair in almost any direction.
Recommendations for short positions:
A strong downward movement continues on the EUR/USD currency pair. Thus, we recommend that you continue to sell the euro with targets of 1.0501 and 1.0465, until new signs of the beginning of the correctional movement appear.
Recommendations for long positions:
Euro purchases with the goal of the Senkou Span B line can be considered no earlier than when the pair consolidates above the Kijun-sen line. However, in any case, it is recommended to be as careful as possible with the opening of any positions. Panic in all markets remains.
Explanation of the illustration:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A – light brown dotted line.
Senkou Span B – light purple dashed line.
Chikou Span – green line.
Bollinger Bands Indicator:
3 yellow lines.
Red line and bar graph with white bars in the indicators window.
Support / Resistance Classic Levels:
Red and gray dashed lines with price symbols.
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movements:
Red and green arrows.