A bit of optimism boosted high-yielding bets against the dollar during the Asian session. But can euro bulls maintain their gains in the next trading session?
Currency Snapshot:
Fresh Market Headlines & Economic Data:
- Australia’s manufacturing PMI deteriorates but benefits from lower Chinese output
- Australia’s services sector hit hard by cancellation of events
- Japan’s manufacturing contracts the sharpest since April 2009, goods demand falls at its steepest in 11 years
- Japan’s services PMI drops from 46.8 to 32.7, the lowest ever, as COVID-19 halts new business and causes cancellations
- BOJ’s core CPI eases from 0.3% to 0.2% in February
- Australia consumer confidence falls to lowest level since last recession
- U.K. locked down after Johnson acts over ‘national emergency’
- Asian stocks rebound, Fed soothes with boundless QE
- RBA pumps 6.9 billion AUD into the financial system
- New Zealand government announces $6.2B loan guarantees for SMEs
- South Korea doubles coronavirus rescue package to $80 billion
- Banks borrow record $89.3B from BOJ’s dollar funding operations on Tuesday
Upcoming Potential Catalysts on the Economic Calendar:
- G7 meetings ongoing
- France’s Markit PMIs at 8:15 am GMT
- Germany’s Markit PMIs at 8:30 am GMT
- Euro Zone’s Markit PMIs at 9:00 am GMT
- U.K.’s Markit PMIs at 9:30 am GMT
- BOE’s FPC statement and meeting minutes at 9:30 am GMT
- U.S. Markit PMIs at 1:45 pm GMT
What to Watch: EUR/USD
The Fed’s unli-QE plan and hopes of a ginormous stimulus bill in the U.S. inspired some risk-taking in the Asian markets and took some shine off the dollar.
But how long can high-yielding bets like the euro keep up their gains against the safe haven? While COVID-19-related deaths in Italy have slowed down a bit, numbers from major Euro Zone economies like Germany, France, and Spain suggest that they might be going down Italy’s path soon.
EUR/USD is now having trouble trading above 1.0800, a resistance that hasn’t been broken since last week.
This time around, a 100 SMA and a low key divergence is also getting the bears’ attention.
Even MarketMilk is on the bears’ side as it recognizes EUR/USD’s “bullish” trend against shorter-term moving averages even as it’s still on the “bearish” side when longer-term moving averages are applied.
Bears can short at current levels and aim for a retest of last week’s lows. Meanwhile, euro buyers can wait for a break above the 100 SMA and consider a retest of previous areas of interest like 1.0950.
Whichever side you choose to trade today, consider your EUR/USD volatility analysis in placing your entry, stop, and profit targets.