Daily Market Analysis

Market Focus

Risk-off sentiment across the globe navigates the foreign exchange market’s fluctuation on Wednesday. With the rising coronavirus cases in the U.S., concerns over the recovery of the global economy has driven Dow Jones, Nasdaq, and S&P 500 down on Wednesday, approaching key support indicators.

At the same time, UK health experts have warned the government about the risk of a second wave of coronavirus contagions as PN Johnson continues to lift restrictive measures, which in turn, results in GBPUSD dropping more than 0.80% on the day.

Last but not least, crude oil prices dropped after US release its stockpiles reports. API reported that there is an increase of 1.75 million barrels while the EIA weekly report posts a 1.4 million gain. Both well above the market’s expectation.

Market Wrap

Dow Jones down 2.72%, S&P500 down 2.59% and Nasdaq slightly dropped by 1.60%
WTI Aug slightly down $2.3 to $38.07, and Brent Oil Aug down $2.04 to $40.28 near closing.
Dollar Index up by 0.57%
Gold down 0.34% and settled around $1761
AUDUSD down 0.88% to 0.6867
EURUSD down 0.50% to 1.1250
GBPUSD down 0.81% to 1.2418
NZDUSD down 1.27% to 0.6408
USDCAD up 0.64% to 1.3636
USDJPY up 0.49% to 107.04

Main Pairs Movement

The dollar appreciated against all of its major rivals, included those considered safe havens. The USDJPY pair recovered to 107 while gold price retreated from a fresh multi-year high of 1779.41 to settle around 1765.

The EURUSD pair came under selling pressure as speculative interest seek for safety in the greenback. Moreover, USD recovers from Tuesday’s lows at 1.3485 for USDCAD and has elevated to levels past 1.3600, hovering at a one-week high region around 1.3630.

On the same note, NZDUSD also dived down from 0.6500 to 0.0.6400 on Wednesday and is one of the worst-performing G-10 currencies today. The overall risk-off sentiment and the dovish monetary policy statement by the RBNZ have punished the kiwi.

COVID-19 Data (EOD):

Technical Analysis:
AUDUSD (H4)

AUDUSD slumped below 0.6890 today after the pair came under a renewed bearish pressure in the American trading hours. Additionally, as a result of the global risk-off sentiment, the pair has fallen more than 0.85% on the day. AUDUSD has been testing the support at 0.6855 and if it penetrates, we expect the pair to consolidate between 0.6793 and 0.6855.

Resistance: 0.6985, 0.7060
Support: 0.6681, 0.6793, 0.6855

USDJPY (D1)

The broad-based strength surrounding the greenback has pushed USDJPY over the 107.00 resistance and has been holding its gain above 106.90. Due to the sharp decline in Wall Street and the lowered US yields, the demand for USD increases drastically, and as a result, rebounds USDJPY pair from its Tuesday’s loss. However, with the risk-aversion sentiment hovering in the background, the demand for JPY is likely to overturn the USDJPY bullish run.

Resistance: 107.20, 107.63, 108.18
Support: 105.09, 105.96, 106.58

GBPUSD (H4)

GBPUSD experienced an intraday pullback after hitting the 1.25390 resistance zone. The greenback buying picked up pace when the US trading session began. The USD bullish run was driven by the intensified concerns over the V-shape economic recovery as an ever-increasing number of new COVID-19 cases kicked in this week. As the GBPUSD is approaching to the psychological support at the rounded 1.2400 region, a break below the zone is needed to confirm the further direction.

Resistance: 1.2537, 1.2689, 1.2810
Support: 1.2207, 1.2331, 1.2400

Economic Data