US Dollar, EUR/USD, USD/CAD, AUD/USD, USD/JPY Analysis
- The FOMC announced an emergency rate cut earlier today.
- In an ironic twist, that announcement did little to stem the recent risk sell-off.
- The US Dollar has continued to sell-off, buoying reversals/retracements in EUR/USD and AUD/USD. USD/CAD is in the spotlight for the Bank of Canada tomorrow and AUD/USD just put in a ‘rate cut rally’ on the heels of the RBA move last night.
FOMC Announces Emergency Rate Cut – Stocks Sell-Off
Coronavirus fears are running rampant and, this morning, the G7 held a conference call to discuss coordinated options. From that meeting, only a statement was provided; but shortly after the FOMC announced that they would be cutting rates by 50 basis points in an emergency move.
This provided a quick flicker of strength in US stocks but that was short-lived, and sellers came back with a vengeance to push the S&P 500 back below the 3k marker. The S&P 500 has since found support around the confluent 2985 level on the chart. The past two trading days have brought strong late-session rallies to the table: Will today bring the same?
S&P 500 Hourly Price Chart
US Dollar Digs into Support
The US Dollar has put in a massive drop over the past week-and-a-half, erasing the entirety of the February rally and, at this point, almost the rest of the 2020 rally.
US Dollar Daily Price Chart
EUR/USD Rockets to Resistance
Going along with the plummet in the US Dollar, EUR/USD has ridden a veritable rocketship over the past two weeks as price action has jumped by more than four big figures.
EUR/USD Daily Price Chart
USD/CAD In Focus Ahead of BoC
Tomorrow brings the Bank of Canada for a rate decision: Will they join the rate cut chorus? CAD weakness has been a primary theme to work with since the January BoC outing and, of late, this has been one of my favored pairs for USD-strength.
Even with that precipitous decline in the US Dollar over the past few weeks, CAD weakness has remained a workable theme. The 1.3500 level looms large as a next level of resistance should the BoC come to the table with a cut at tomorrow’s meeting.
USD/CAD Four-Hour Price Chart
AUD/USD: Rate Cut Rally as USD Weakness Reigns Supreme
The RBA cut rates last night: But you might not know that by looking at the AUD/USD sharp, as the pair has put in a sharp rally after that rate move. This is likely due to the fact that the RBA cut was well priced-in while the FOMC cut was a surprise. At this stage, there’s a bit of resistance potential from a bearish trendline projection taken from the 2020 highs; but a bit deeper on the chart is a more attractive zone for resistance plays, and that runs from .6671-.6700. This zone of prior support held the lows for the first half of February and, as yet, hasn’t been tested for resistance since the breakdown.
AUD/USD Four-Hour Price Chart
USD/JPY Plummets into Possible Support
Yen-strength has come back with aggression following the sell-off from two weeks ago. As looked at in the webinar, price action is attempting to cauterize support at a key Fibonacci level, taken from around the 107.00 handle in the pair.
USD/JPY Daily Price Chart
--- Written by James Stanley, Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
