We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Major investment bank models have touted USD selling, given the outperformance in US equities relative to its counterparts over the past month. How is this likely to impact the month-end rebalancing? Find out from @JMcQueenFX here:https://t.co/MtNrHmXZpD https://t.co/YvoHlUsdVr
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/X15k6b4ZyB
  • The month of May saw equities rise across the board. The #Dow Jones and #DAX 30 will look to hold above nearby support while the #Nasdaq 100 may look to attack all-time highs. Get your #equities market update from @PeterHanksFX here: https://t.co/dQxkG68R0I https://t.co/cgfcOs14qG
  • There is a dramatic departure between yield curve pricing for a recession and other measures of near-term growth; the Q2’20 Atlanta Fed GDPNow is extremely alarming.Get your market update from @CVecchioFX here: https://t.co/eMd3T8EwDO https://t.co/56oUP6we9U
  • The #DAX has now closed the gap from the beginning of March with the index breaking above 61.8% fib at 11592. Get your DAX market update from @JMcQueenFX here: https://t.co/wr67nkxc8z https://t.co/CkxPZn1v3t
  • Emerging market currencies haven’t been treated equally by the effects of global contagion, even if most have suffered to some degree. However withdrawal of investment flows could hit them all. Get your market update from @DavidCottleFX here:https://t.co/QzNoNYgMgP https://t.co/9CV6iZt40j
  • My weekend trading video: 'S&P 500 Rises on Trump China Presser, #NFPs and Rate Decisions Ahead' https://www.dailyfx.com/forex/video/daily_news_report/2020/05/30/SP-500-Rises-on-Trump-China-Presser-NFPs-and-Rate-Decisions-Ahead.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/ZvoGoibzj1
  • Hopes are high for deeper European economic integration as the continent battles back from the coronavirus slowdowns – but will it hold? What impact can this have on #Euro? Find out from @JStanleyFX here: https://t.co/b9ZWRd4cTr https://t.co/gngm5tKqjz
  • The US Dollar could rise against #ASEAN currencies such as the Singapore Dollar as US-China tensions seem to escalate. The Indian Rupee is also looking ahead of local 1Q GDP data.Get your market update from @ddubrovskyFX here:https://t.co/LkEFJViPWY https://t.co/iL7xlHLBiF
  • #Gold has a short-term bullish set-up that may play nicely with USD weakening. The longer and shorter-term path of least resistance remains higher. Get your $XAUUSD technical analysis from @PaulRobinsonFX here:https://t.co/6gt3F9LuGP https://t.co/B4MVrg8f6i
US Dollar Tanks, S&P 500 Stabilizes as FOMC Counters Coronavirus

US Dollar Tanks, S&P 500 Stabilizes as FOMC Counters Coronavirus

2020-03-27 19:30:00
James Stanley, Strategist
Share:

S&P 500, US Dollar Talking Points

  • It’s been a month of extremes in global markets as a shocking and historically aggressive equity sell-off finally found some semblance of support this week.
  • The US Dollar put in a strong rally as risk aversion was heating up in the middle of March, gaining as much as 8.8% over a ten-day-period.
  • With the S&P 500 digging into support and the US Dollar tempering gains, both reactions to recent FOMC actions – the big question now is whether the worst is over or whether there’s more selling yet to come.

S&P 500 Finds Support After Limit-Down Sunday Open

We’re nearing the close of what’s been another eventful week across global markets. The big question at this point is whether a low has been set in US equities as a trove of various stimulus measures from the Federal Reserve may have finally helped to bring some support into play.

Weekend risk remains a daunting prospect, however, as the past couple of weeks have seen US equity futures go ‘limit down’ after the Sunday open – even with big announcements from the Federal Reserve designed to do the exact opposite. But, grading the performance of the US Dollar combined with a bright patch of performance in US equities after what had become a brutal backdrop – hope remains that risk aversion may finally be taking a rest.

In the S&P 500, the big item this week was price action moving into a technical ‘bull market,’ denoted by a bounce of 20% or more which showed from the Monday low up to the Thursday high. This comes just a couple of weeks after the S&P 500 had moved into ‘bear market’ territory, designated as a sell-off of 20% or more. With the paring of those gains on Friday, the ‘bull market’ argument doesn’t really hold at this point but did for a brief observation after the Thursday close.

S&P 500 Daily Price Chart

SPX500 Daily Price Chart

Chart prepared by James Stanley; SPX500 on Tradingview

Making matters a bit more complex – the 20% rally that showed Monday thru Thursday cut the total loss on the S&P 500 (from the February high) to 22.5%. That number had grown to 35.9% after last Sunday’s open so – even though US equities temporarily moved into that ‘bull market’ status – the argument can be made that a bigger bear market persists and this week’s bounce was but a pullback or retracement in a bigger-picture theme.

Building Confidence in Trading
Building Confidence in Trading
Recommended by James Stanley
Building Confidence in Trading
Get My Guide

Arguments on Both Sides of the Risk Trade

We’re still seeing history take place in front of us. Never has the world seen so much economic accommodation ushered in so quickly. During the Financial Collapse in 2008, it took months and months to accomplish what took a few weeks here, with both the Fed and Congress opening up stimulus measures designed to offset the economic slowdown emanating from the spread of the novel coronavirus, which is another item of history that’s taking place before us.

There’s not really a template for how a society should or can most adequately handle a pandemic scenario. Sure, the ‘Spanish Flu’ presents some evidence but this was more than 100 years ago and the world, and financial markets, were in a much different spot at the time. Most evidence suggests there hasn’t yet been a peak in cases and, until there is, it’s difficult to project just how long or how aggressively this slowdown might cut into the American and, in turn, the global economy.

So, there’s rationale for why US equities sold-off so aggressively in such a short period of time, marking another historical item in just how quickly that sell-off showed up. As looked at earlier this week, a big zone of longer-term support came into play in the S&P 500 and, has since helped to hold the lows.

S&P 500 Monthly Price Chart

SPX500 ES SPY Monthly Price Chart

Chart prepared by James Stanley; SPX500 on Tradingview

US Dollar Snaps Back

This extreme uncertainty had led to a massive move of strength in the US Dollar, with the currency jumping by as much as 8.8% in a ten-day-span in the middle of March. And given the extreme volatility that had shown in Treasuries, it made sense as to why there was so much risk aversion showing as global flows drove into cash. Treasury markets have since calmed, and the US Dollar has softened in response, giving back more than 50% of that prior bullish move.

Starts in:
Live now:
Jun 02
( 17:06 GMT )
James Stanley's Tuesday Webinar
Trading Price Action
Register for webinar
Join now
Webinar has ended

US Dollar Four-Hour Price Chart

US Dollar Four-Hour Price Chart

Chart prepared by James Stanley; USD on Tradingview

With now just two trading days left in the month, the monthly price bar on the US Dollar is showing as a long-legged doji, a sign of extreme indecision. Notably, resistance played-in just ahead of the 103.00 level on DXY last week, the same zone that turned around a bullish advance in December 2016 and January of 2017. A break-above the 103.82 level, should bulls continue to push, would constitute a fresh 17-year-high in the currency.

US Dollar Monthly Price Chart

US Dollar Monthly Price Chart

Chart prepared by James Stanley; USD on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.