Market volatility surges over coronavirus lockdown
Market volatility moved to its highest level since the financial crisis of 2008 this week, as a number of countries went into lockdown over the worsening spread of the coronavirus. The VIX, which is a key measure of market volatility soared to its highest level since November 2008. Equity and commodity markets also moved sharply lower again this week, as traders and investors feared the economic consequences that the coronavirus would create for the global economy. WTI Oil moved to towards the $20.00 per barrel level, while the price of gold fell below the $1,500 support level.
- The USDJPY pair is only bullish while trading above the 106.50 level, key resistance is found at the 109.40 and 111.10 levels.
- If the USDJPY pair trades below the 106.50 level, key support is located at the 104.50 and 101.80 levels.
The British pound fell to its weakest level against the US dollar since 1984 this week as investors sold sterling over fears about the health of the UK economy. The UK government announced emergency spending measures and an aid package for citizens affected by the coronavirus, while the Bank of England cut interest rates to 0.10 percent. Traders speculated that the United Kingdom's economy could come under severe pressure as many industries go into shutdown. The Gross Domestic Product of the UK economy is heavily dominated by the services sector, leaving the UK vulnerable to widespread job losses and an increasing debt burden.
- The GBPUSD pair is only bearish while trading below the 1.2200 level, key support is found at the 1.1300 and 1.0950 levels.
- If the GBPUSD pair trades above the 1.2200 level, buyers may test towards the 1.2300 and 1.2380 resistance levels.
The Federal Reserve cut interest to zero this week and announced a new QE stimulus package to fight the coronavirus. The market reaction was muted, with the US dollar failing to weaken and US equity markets still remaining under downside pressure. The Trump administration also announced a series of emergency spending measures and monetary support for US citizens who have been negatively impacted by the coronavirus. The emergency measures from the Federal Reserve were announced in early week trading, with the US central bank suspending its normal policy meeting and press conference on the 17th March.
- The BTCUSD pair is only bullish while trading above the $6,400 level, key resistance is found at the $7,000 and $8,400 levels.
- The BTCUSD pair is only bearish while trading below the $6,400 level, key support is located at the $4,600 and $3,700 levels.
US dollar breakout
The US dollar index moved to its highest level in over three years this week as investors flocked to the safety of the greenback. The US dollar made major gains against the euro, Australian dollar, New Zealand dollar, and the Canadian dollar. The greenback is often seen as a safe-haven during financial crashes, as the US dollar holds the title of the world’s reserve currency. The greenback also benefitted from increased demand for US bonds, and a flight away from the emergency market and antipodean currencies.
- The EURUSD pair is only bearish while trading below the 1.1090 level, key support is found at the 1.0700 and 1.0500 levels.
- If the EURUSD pair trades above the 1.1090 level, buyers may test towards the 1.1350 and 1.1510 resistance levels.