We have warned against trend reversal several times since March 8th and now USOIL is breaking one support after another. WTI Crude lost 5.9% in Tuesday’s trading. Oil prices moved lower together with equities as coronavirus fears caused investors to decrease risk in their portfolios. USD strengthened against the main rivals even though the treasury yields retraced 1.47%. The Fed Chair Powell noted in his testimony that the economy was hard hit but worst has been avoided due to swift and vigorous action.  By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

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How can the US economy be simultaneously in a crisis but at the same time healthy enough for the government to consider tax hikes? This question was directed to the US Treasury Secretary Yellen who pointed out that joblessness is a substantial problem at the moment but once the crisis is over the necessary infrastructure investments have to be paid by tax increases. The US stock indices declined moderately yesterday: S&P 500 (-0.76%), DJIA (-0.94%) and Nasdaq Composite (1.12%). The small-cap index Russell 2000 (-3.58%) lost quite a bit of ground in yesterday’s trading.

Today’s PMI releases are likely to create multiple trading opportunities in major USD pairs. Over the last year, when the coronavirus has impacted both services and manufacturing sectors PMI releases have often created more intraday volatility than the US Non-Farm Payrolls release. The day starts with French PMI releases at 08:15 GMT with German figures coming out 15 minutes later. EU wide PMIs usually aren’t big market movers but then the UK releases could trading opportunities at 09:30 GMT and the US Manufacturing PMI at 13:45 GMT. For more details on macroeconomic releases see our economic calendar

On March 8th we said that the market has run too far too fast and that it could retrace lower. Now the trend has reversed. USOIL bounced higher from our support level highlighted in the latest video (here) but this rally soon failed and USOIL is now trading below the zone that used to support the price. This zone is now resistance and the next resistance level above this is at 62.00. The next significant support can be found at 54.00. USOIL is in a downtrend so further declines and lower reactionary highs are likelier than a rally into new highs.

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GBPUSD has broken out of the trading range it was trading in for three weeks. It has been our view that breakout from the formation is likely to move the cable near to the 61.8% retracement level (at 1.3554). The nearest key resistance level in the daily chart is now at 1.3778.  Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts.

The violation of our support zone led to further price decline (as expected) and EURJPY dropped to our next zone at 128.18 – 128.50. There has been a small bounce from the level but the market is now in a downtrend which suggests lower swing highs and more downside should be ahead.  The next significant zone below 128.18 – 128.50 can be found at 127.65 – 127.83. The nearest significant resistance level above the 129.28 – 129.54.

Recent macroeconomic data releases

  • New Zealand GDP -1.0%, 0.2% expected
  • Australian Employment Change 88.7K, 30.5K expected
  • Australian Unemployment Rate 5.8%, 6.3% expected
  • BOE Official Bank Rate 0.10%, 0.10% expected
  • Canadian ADP NFP Change -100.8K, -65.8K previous
  • US Philly Fed Manufacturing Index 51.8K, 22.5 expected
  • Canadian Core Retail Sales -1.2%, -2.8% expected
  • Canadian Retail Sales -1.1%, -3.0% expected

Important macroeconomic data releases today

  • UK CPI 0.8% expected
  • French Services PMI 45.5 expected
  • French Manufacturing PMI 56.4 expected
  • German Manufacturing PMI 60.4 expected
  • German Services PMI 46.4 expected
  • EU Manufacturing PMI 57.5 expected
  • EU Services PMI 46.1 expected
  • UK Services PMI 55.0 expected
  • UK Manufacturing PMI 51.1 expected
  • US Manufacturing PMI 59.6 expected
  • Fed Chair Powell’s Testimony
  • ECB President Lagarde’s Speech

You may access the times and dates in the economic calendar here. Open a VIP Black account now at www.TIOmarkets.com. We want you to be able to exploit trading opportunities in financial markets with 0 commission and tight spreads. Take advantage of the best trading account in the industry: Tiomarkets VIP Black. For more details on this truly exceptional offering see here. For more analysis and commentary, visit our YouTube channel where you can find daily market commentary videos to support your learning and growth as a trader.

Trade Safe!

Janne Muta
Chief Market Analyst

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All the prices in this report are CFD prices based on price charts provided by TIOmarkets unless otherwise stated.

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Janne Muta

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