By Lukman Otunuga, Research Analyst, ForexTime
Most Asian stocks were shaky on Wednesday morning as oil prices clawed back some of their record-setting losses amid fears of a prolonged coronavirus economic downturn.
The historic meltdown in Oil prices has left a lasting impact on global sentiment and this continues to be reflected across currency, commodity and stock markets.
Dollar to flex its muscles in dash for cash
The Dollar has enough ammunition to defend its throne as global recession fears, severely depressed oil prices and chaos surrounding the coronavirus spark an investor flight to cash.
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In regards to the technical picture, the Dollar Index remains in a wide range on the daily timeframe with prices trading above 100.00 as of writing. The upside momentum may open a path towards 101.00. A solid breakout above this level could trigger a move higher towards 103.00.
Alternatively, sustained weakness below 101.0 could trigger a decline back towards 99.90.
USDJPY trades within 100 pip range
If any contender could seize the Dollar’s throne, it will be the Japanese Yen which has appreciated against every G10 currency since the start of 2020.
The unfavourable global macroeconomic conditions, explosive levels of volatility and coronavirus related fears have fuelled risk aversion. In times of uncertainty, the Japanese Yen remains a traders best friend and this should hold true in Q2.
Looking at the technical perspective, the USDJPY is ranged bound on the daily timeframe with support at 107.00 and resistance at 108.00. A breakout above or below the identified levels may trigger a breakout/down opportunity towards 109.30 or 105.60.
EURUSD on standby…
The Euro has weakened against almost every single G10 currency since the start of the month thanks to rising recession fears and concerns around a sovereign debt crisis.
Buying sentiment towards the currency is set to evaporate as investors turn to the world’s most liquid currency, King Dollar. In regards to the technical picture, a breakdown below 1.0840 could open a path towards 1.0780 and 1.0650. Should 1.0840 prove to be a reliable support, prices could rebound back towards 1.0900 and 1.1000 in the medium term.
Let’s not forget about the GBPUSD
Technical traders will continue to observe how the GBPUSD behaves around 1.2300 level. A solid breakdown below this point could spark a decline towards 1.2200. Alternatively, a rebound from 1.2300 should inspire a move back towards 1.2400 and potentially 1.2500.
Commodity spotlight – Gold
Gold is trading within a $25 range on the daily timeframe. A breakout above $1700 could spark a move higher towards $1735.
Alternatively, a breakdown below $1675 may signal a selloff towards $1640.
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Article by ForexTime
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