This week has started with renewed fears and risk aversion as the coronavirus continues to spread outside of China. South Korea and Italy are reporting rapid outbreaks and while it is clear from which source the outbreak in South Korea started, it is still not clear who the original carrier was in Italy where the number of cases has increased to 283 and 7 deaths. South Korea is planning to test over 200,000 members of a secretive church where a 61-year-old woman is believed to be responsible for spreading the virus. South Korea now has 977 cases, which is the biggest number outside of China followed by Italy. Countries around the world, including the United States have issued more travel warnings and major world indices took a decline, such as the S&P 500 lost -3.35% and Dow Jones dropped by -3.56%. The Dollar Index DXY corrected down and left the overbought area on a Daily TF, but the price is unable to break below 23.6% Fibo and 13EMA as support around 99.07. RSI 63.86. Investors are starting to price in a FED rate cut, the next FOMC meeting and interest rate decision is on March 18th and therefore we advise listening to speeches by FOMC members for clues.
EUR/USD on a Daily TF is anti-correlating with the DXY. The price has left the oversold area but couldn’t break above the 23.6% Fibo and 13EMA as resistance around 1.08525. RSI 35.24. Parabolic SAR has reversed and pointing up. MACD is ready for an intersection up. The Euro is being supported by USD weakness and upbeat German Ifo Business Climate Index for February, which was released slightly above forecast at 96.1. Look for buy opportunities once the price breaks and closes above 13EMA.
Resistance: R1 1.08720, R2 38.2% Fibo 1.08987, R3 50% Fibo 1.09360.
Support: S1 1.08050, S2 1.07779, S3 1.07400.
GBP/USD on a Daily TF continues to trade in a falling wedge. The price is making an attempt break above 1.29500 but the pair has met resistance at the 13 and 48 EMA around 1.30. Brexit negotiation remain the driver for the Sterling.
Resistance: R1 48EMA 1.29945, R2 1.30500, R3 1.31.
Support: S1 1.29500, S2 38.2% Fibo 1.28835, S3 200EMA 1.28506.
USD/JPY on a Daily TF left the overbought area and dropped to 110.333 but then rebounded and is trading around 110.577. RSI 55.40. The pair is being supported by 13EMA. MACD bullish histogram has decreased, MACD line is pointing down but still far from the Signal line. Parabolic SAR is at the bottom of todays candle wick ready for a reversal.
Resistance: R1 111, R2 111.500, R3 112.
Support: S1 110.325, S2 110, S3 109.515.