The euro has enjoyed a stellar rise against most major counterparts thanks to a combination of fundamental catalysts and technical breakout. The single currency has been sought after as the fallout from the coronavirus took a toll on riskier assets like the Australian dollar.
The markets expect the ECB to follow the Fed and announce stimulus measures on Thursday. This could cause a temporary pullback if buyers take profit around the psychological level of 1.7000. In case of a retracement, 1.6770 will be a major support to maintain the bullish mood.
USDJPY Goes into Sharp Reversal
The Federal Reserve surprised markets last Tuesday with an emergency rate cut to cushion the world’s largest economy from the spread of the coronavirus. While this came in as a welcomed measure, market participants also anticipate deeper easing, possibly at the next FOMC meeting.
As a result, a low-yielding US dollar has come under pressure against safe-haven currencies like the Japanese yen. The sell-off may continue if the price closes below the critical support of 104.50. A rebound, should it happen, would meet strong resistance near 107.50.
GBPUSD Recovers on Dollar Weakness
Cable recovered to its previous high of 1.3000 after a short-lived dip as the greenback softened across the board. After BOE Governor Mark Carney admitted that the coronavirus could deal a “large” but temporary blow to Britain’s economy, speculations have grown that the Bank of England might also go down the path of cutting rates to mitigate economic risks.
Against the backdrop of an uncertain Brexit, the pound sterling has limited room on the upside. 1.3200 is a key resistance while 1.2750 is buyers’ stronghold if the greenback makes a comeback.
Gold Surges on Safe-Haven Demand
Gold has found strong buying interest and bounced back to the previous high of 1688. As the US and Europe scramble to contain the outbreak, market sentiment is expected to worsen. We may not yet have seen the bottom in the equity markets, and investors have chosen to put their faith in the precious metal.
Bullion’s rally is likely to sustain should the risk of global recession translate into upcoming economic data. The rebound from the 30-day moving average (1585) was a strong sign that sentiment remains upbeat, for gold. 1730 is the next target as more trend followers join in and bid up the price.