The U.S. stocks soared on news of Congress is close to passing a substantial coronavirus relief bill. The sentiment was further boosted by President Donald Trump’s comments that he would like the U.S. economy to reopen by Easter in mid-April. The Dow Jones Industrial Average surged 2113 points (+11.4%) to 20,704, its biggest one-day percentage gain since 1933. The S&P 500 jumped 209 points (+9.4%) to 2,447, and the Nasdaq 100 rose 546 points (+7.8%) to 7,553.
Later today, February durable goods orders (preliminary reading, -1.0% on month expected) will be reported.
Economic Events to Watch Today
EUR/USD – Daily Analysis
The EUR/USD advanced 0.8% to 1.0809. The Markit Eurozone Manufacturing PMI slid to 44.8 in March (39.0 expected) from 49.2 in February and Services PMI sank to 28.4 (39.5 expected) from 52.6.
The EUR/USD currency could drop below the 1.08 if the coming German IFO Expectations Index for March disappoints expectation of 82, strengthening recession fears. Apart from this, U.S. Durable Goods data for February is also scheduled to release.
The traders need progress soon in the global market; otherwise, the risk assets may suffer another selloff, boosting haven demand for the U.S. dollar. At press time, the S&P 500 futures are reporting a 1.4% drop.
The U.S. dollar continues trading in the red territory against majors, as shown by the 0.3% drop in the dollar index. Federal Reserve’s unlimited quantitative easing plan has decreased pressure in funding markets and bought time for the politicians.
The headlines regarding coronavirus and stimulus package by the Federal Reserve will be key to watch. Eyes will be on the German IFO Expectations Index for taking new directions.
Daily Support and Resistance
- S1 1.0531
- S2 1.0673
- S3 1.0742
Pivot Point 1.0815
- R1 1.0885
- R2 1.0957
- R3 1.11
EUR/USD– Trading Tips
On Wednesday, the EUR/USD is trading sideways, forming higher’s high and higher’s a low pattern, which indicates stronger chances of a bullish bias in the market. The EUR/USD is trading around 1.0815, and it’s forming neutral candles while trading in an upward channel, which may support the pair around 1.0775.
On the higher side, the EUR/USD pair may face resistance around 1.0880, and above this, the pair has the potential to target the next resistance level of 1.0930 while the EUR/USD has odds of staying bearish below 1.0920 to target 1.0805.
GBP/USD– Daily Analysis
The GBP/USD surged 2.1% to 1.1789 after the U.K. government ordered lockdown measures to stop coronavirus spreading. On the other hand, the Markit U.K. Manufacturing PMI fell to 48.0 in March (45.0 expected) from 51.7 in February, and Services PMI dipped to 35.7 (45.0 estimated) from 53.2.
The GBP/USD currency pair may drop to their lowest level if the UK CPI data releases sluggish while a surprise positive figures could help the pair extend its fresh recovery rally from the multi-year low.
The Consumer Price Index published by the Office for National Statistics is a gauge of price moves by the comparison among the retail prices goods and services. The purchasing power of GBP is slowed down by inflation.
The CPI is a leading indicator to measure inflation and show changes in purchasing trends. Usually, a high figure is understood as positive (or bullish) for the GBP, while a sluggish figure is seen as negative (or Bearish). Let’s look at the technical side of the market.
Daily Support and Resistance
- S1 1.1339
- S2 1.1535
- S3 1.1662
Pivot Point 1.1731
- R1 1.1858
- R2 1.1927
- R3 1.2122
GBP/USD– Trading Tip
The direct currency pair GBP/USD maintains a broad trading range of 1.1400 – 1.1885 for another day as traders seem to wait for the U.K. Inflation today and Bank of England’s rate decision tomorrow. Today, the bullish breakout of the 1.1889 level can open the buying trend until the next resistance level of 1.2185 (38.2% Fibo level) and 1.2300 level, which accounts for a 50% retracement. On the lower side, the Cable can find support around 1.1665 and 1.1445.
A bearish breakout of 1.1425 level can lead the Cable towards the next support area of 1.1050. The MACD is tossing above and below zero as investors are unable to determine the trend of the market.
USD/JPY – Daily Analysis
During the Wednesday early Asian session, the USD/JPY currency pair found on the bullish track and hit the session high near 111.58, mainly due to the recovery in the market risk sentiment because the United States policymakers agreed on COVID-19 bill. The USD/JPY is trading at 111.48 and consolidates in the range between the 110.75 – 111.56.
After the two-days of disappointment, the Senate Democrats and Republicans ultimately agreed on the Trump administration-backed stimulus package plan. However, the raised expectations of the expected $2 trillion package to control the deadly virus impact and fresh strategy of reducing coronavirus (COVID-19) cases from Italy also improved the market risk sentiment.
Whereas, the United States 10-year treasury yields rose 4-basis points (bps) to 0.853% while the U.S. stock futures also decreased earlier losses. The Asian stocks flashing green and marked slight gains by the press time, which show’s drop in demand for safe-haven assets such as gold and Japanese yen.
For the time being, the traders are keenly awaiting the details of the voting as well as the times of the package for taking additional direction. However, the U.S. Durable Goods Orders for January and additional coronavirus headlines will be key to watch.
Daily Support and Resistance
- S1 107.85
- S2 109.43
- S3 110.32
Pivot Point 111.02
- R1 111.91
- R2 112.6
- R3 114.19
USD/JPY – Trading Tips
Technically, the safe-haven currency pair USD/JPY hasn’t changed a lot as it continues to consolidate around 111.300. On the 4 hour chart, the USD/JPY has formed a bullish channel that is still intact, and it’s pretty much likely to support the USD/JPY prices around 110.650.
A bearish breakout of 110.600 can lead its prices toward 109.600 level. The USD/JPY prices towards the next support level of 108.350, and around this level, we can expect USD/JPY to bounce off again. Conversely, the pair faces resistance around 111 and 112.190 today. Let’s stay bullish above 109.650 and bearish below the same level today.
All the best for today!