• GBP/JPY holds onto recovery gains after confirming the bullish chart pattern.
  • 100-bar SMA, monthly resistance line in focus.
  • 23.6% Fibonacci retracement, 126.15 add to the supports.

Having confirmed the inverse head-and-shoulders bullish pattern on the four-hour (H4) chart, GBP/JPY remains positive around 131.20 amid the early Wednesday morning in Asia.

The pair currently heads to the confluence of 100-bar SMA and the monthly falling trend line, near 132.70/75.

Also adding upside filter is the 61.8% Fibonacci retracement of its current month declines, at 133.10.

In a case where the bulls manage to dominate past-133.10, odds of witnessing 137.20 back to the chart can’t be ruled out.

If at all the GBP/JPY prices slip below the neckline of 129.50 and defy the bullish formation, 23.6% Fibonacci retracement near 127.50 can question the sellers.

Should there be a clear downside past-127.50, 126.15 and the monthly low near 124.00 will be on the sellers’ radar.

GBP/JPY four-hour chart

Trend: Further recovery expected

 

While providing details of the South Korean governments further combat measures against the coronavirus (COVID-19), Finance Minister Hong Nam-ki mentioned that the government will prepare various layers of tools to inject Forex liquidity into the markets.

Key quotes

The government will prepare various layers of tools to inject Forex liquidity into the markets.

Government to exempt levy on foreign currency borrowing temporarily.

Government to relax liquidity coverage ratio rules for banks temporarily.

FX implications

The USD/KRW pair fails to portray any immediate reaction to the news while taking rounds to 1,234. However, the pair remains on the back foot after marking the heavy declines the previous day.

While providing details of the South Korean governments further combat measures against the coronavirus (COVID-19), Finance Minister Hong Nam-ki mentioned that the government will prepare various layers of tools to inject Forex liquidity into the markets.

Key quotes

The government will prepare various layers of tools to inject Forex liquidity into the markets.

Government to exempt levy on foreign currency borrowing temporarily.

Government to relax liquidity coverage ratio rules for banks temporarily.

FX implications

The USD/KRW pair fails to portray any immediate reaction to the news while taking rounds to 1,234. However, the pair remains on the back foot after marking the heavy declines the previous day.

US President Trump is addressing the nation pertaining to COVID-19 during the Task Force meeting. Trump said on Tuesday his administration’s decision to loosen restrictions related to the coronavirus and re-open the US economy would be based on facts and data but said the goal remained to do so by the Easter holiday in April. Trump, speaking to reporters at the White House, explained that for the most part he did not expect to have to use the Defense Production Act but would do so as needed.

Key comments from Task Force

  • Would be great to open by Easter, evaluating data.
  • Lawmakers getting very close to a fair deal on COVID-19 stimulus, senators hopefully will vote soon.
  • Would be great to open by easter, evaluating data.
  • Says for the most part we won’t have to use defense production act but will use it if need be.
  • Says our decision on reopening economy will be based on hard facts and data.
  • Says we’re working hard to make easter a reality for reopening economy.
  • US Vice President pence says we are particularly focused on new york
  • Birx says everyone who left new york city in last few days should self-quarantine for next 14 days.
  • There could be flexibility in different areas of the country, says Dr. Fauci. “It’s going to be looking at the data.”
  • Kudlow says the overall government aid to the economy would total $6 trillion, including the $2 trillion from Congress and $4 trillion from the Fed.
  • “Great Progress” on Stimulus Deal, Kudlow says.
  • Birx says 370,000 coronavirus tests have been done so far.
  • NYC is a hot spot, other parts of US are doing very well. 
  • We can have large sections of the country open like the farm belt, such as Texas.
  • We will have a tremendous bounce back, it’s going to go very quickly. 
  • US health official Fauci says the date for reopening the economy is very flexible.

 

 

  • NZD/USD registers a three-day winning streak.
  • Risk-tone remains positive amid hopes of further stimulus from the US.
  • US data, coronavirus headlines and the COVID-19 Bill expectations in the spotlight.

With New Zealand’s February month trade data coming in better than previous, backed by the RBNZ’s QE proposal, NZD/USD extends the recovery gains to 0.5840 amid the early Wednesday morning in Asia.

New Zealand’s February month Trade balance recovered from $-3.87B previous to $-3.26B. Details suggest the mixed moves by the Imports and the Exports data as the former weakened from $5.073B to $4.33B while the later rose to $4.92B versus $4.73B earlier readouts.

The pair recently took clues from the RBNZ’s proposal of 250 million New Zealand dollar worth of government bond-buying as a part of its first tranche of the Quantitative Easing (QE). The move is a part of the central bank’s earlier pledged $30 billion of New Zealand Government Bond (NZGB) purchase with a range of maturities across the yield curve over the next 12 months.

Also affecting the quote’s latest moves were optimism surrounding the US COVID-19 Bill, the Fed’s unlimited QE and the reduction in Italy’s death toll. The trifecta impact boosted the market’s risk tone together with the US 10-year treasury yields and equities.

Markets are likely to await further details on how much and when the US aid package will be announced. Also on the traders’ radar will be the coronavirus headlines as well as the US data concerning the February month Durable Goods Orders, expected -0.8% versus -0.2%.

Technical Analysis

While 10-day SMA, currently near 0.5870, acts as the immediate upside barrier for the pair, last Wednesday’s top near 0.5970 and 0.6000 mark could restrict its further recoveries. On the downside, 0.5740 and 0.5600 should be watched carefully during the quote’s fresh declines.

 

  • The Dow DJIA, added 2,112.98 points, or 11.37%, to close at 20,704.91,
  • The S&P 500 index SPX, +9.38% put on 209.93 points, 9.38%, to close at 2,447.33,
  • The Nasdaq Composite rose 557.18 points, or 8.12%, ending trading at 7,417.86.

US stocks took off on Tuesday, with the Dow Jones Industrial Average notching a record one day gain and its best percentage gain since 1933 as investors latched on to optimism from the White House of COVID-19 and the potential for stimulus from Congress agreeing on a fiscal package aimed at combatting the economic impact of the virus.

How did the benchmarks perform?

Consequently, the Dow DJIA, +11.36% put on 2,112.98 points, or 11.37%, to close at 20,704.91, the S&P 500 index added 209.93 points, 9.38%, to close at 2,447.33, and the Nasdaq Composite index rose 557.18 points, or 8.12%, ending trading at 7,417.86. For 2020, the Dow is losing 27.45%, the S&P 500 has lost 24.25%, and the technology-heavy Nasdaq is 17.33% lower.

ANZ Bank explained that we have seen enormous stimulus unleashed globally and while it cannot stop the economic slump, it does provide a safety net going forward. “Germany, which has freed up close to 35% of GDP in terms of stimulus, is considering a post-COVID-19 stimulus. The US no doubt will do the same as will other countries, and central banks seem willing to finance it.”

DJIA levels

 

  • AUD/JPY remains upbeat around an eight-day high.
  • Sustained trading beyond 10-day SMA, bullish MACD favor buyers.
  • 23.6% Fibonacci retracement adds to the support.

Following its sustained break of 10-day SMA, AUD/JPY remains 0.35% positive around 68.55 amid the early Asian session on Wednesday. In addition to the successful clearance of the short-term SMA, bullish MACD also favors the buyers.

As a result, traders will now target the 21-day SMA level around 67.70 during the further upside. However, the March 09 gap around 69.00 and 61.8% Fibonacci retracement of December 2019 to March 2020 fall, near 70.20 could challenge the bulls afterward.

In a case where the AUD/JPY prices remain positive after 70.20, January month low near 72.45 will return to the charts.

On the downside, a daily closing below the 10-day SMA level of 65.00 will renew selling pressure towards 23.6% Fibonacci retracement figures around 63.80.

However, 62.40 and 61.70 could stop the bears from revisiting the previous week’s low near 59.90.

AUD/JPY daily chart

Trend: Bullish

 

  • AUD/USD stays positive near the three-day high.
  • US President Trump keeps signing nearness to COVID-19 Bill, turns down the odds of using the Defense Production Act.
  • A light economic calendar in Asian will keep the focus on the coronavirus headlines.

Having been the biggest G10 winners the previous day, AUD/USD extends the recovery moves to 0.5985 amid the early Australian session on Wednesday. While optimism surrounding the US COVID-19 Bill seems to favor the broad risk-on, fear concerning the coronavirus (COVID-19) outbreak in the US is likely the latest drag on the quote.

The trifecta impact…

Not only increased odds of the US COVID-19 Bill, estimated around $2 trillion, but the previous declines in the coronavirus-led death toll in Italy and the Fed’s Quantitative Easing (QE) also helped the Aussie pair the previous day.

As per the recent updates from the UK’s Daily Mail, Italy’s daily COVID-19 death toll shot back up today with 743 in one day, but more evidence emerged that the coronavirus infection rate is slowing thanks to a painful national lockdown.

On the other hand, the US President Donald Trump, in his latest public appearance, said that lawmakers getting very close to a fair deal on COVID-19 stimulus, senators hopefully will vote soon. The odds of the dead were also boosted by the White House Economic Adviser Larry Kudlow afterward.

Likely challenging the buyers are updates that suggest one in three cases are positive for the coronavirus in New York.

Amid all this, the US stock futures carry the previous day’s gains posted by Wall Street. It’s worth mentioning that the DJI30 marked the best rise since 2008 on Tuesday.

Investors will now take clues from the coronavirus headlines amid a lack of major data during the Asian session. However, the US Durable Goods Orders could entertain traders amid the US session.

Technical Analysis

The pair currently probes the 10-day SMA, at 0.5965, a sustained break of which could boost the odds of witnessing 0.6000 back to the charts. However, bulls are less likely to get convinced unless clearing the mid-month top near 0.6300. On the downside 0.5900 and 0.5850 hold the gate for the fresh declines towards 0.5700.