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S&P 500, US Dollar on Wild Rides as the World Wrestles with Risk

S&P 500, US Dollar on Wild Rides as the World Wrestles with Risk

2020-03-12 19:15:00
James Stanley, Strategist
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S&P 500, US Dollar Talking Points

US Markets Go on Wild Ride

It’s been a busy day amidst a brutal week for equity markets as both the Dow Jones and S&P 500 sunk into bear market territory. The FOMC sprung to action once again, this time with an emergency announcement for the repo market; but after a quick rally in US equities sellers came right back in to push prices back towards the day’s lows.

This took place during the first ten minutes of the webinar; and the mechanics of the operation were covered by our own Justin McQueen in the article, Dow Jones Surge, US Dollar Drops as Fed Unleashes Huge Liquidity Pump.

In the S&P 500 as we near the final trading hour of the US equity session; the big question is whether sellers will be able to breach the 2500 psychological level. That area has already been tested a few times today but, as yet, sellers haven’t been able to break much fresh ground. Caution is of the upmost importance here, as stretched markets can cut both ways, evidenced by the 150-handle range that developed around this afternoon’s announcement that was quickly faded-out.

S&P 500 15-Minute Price Chart

ES SPY SPX SP500 Chart

SPX500 on Tradingview

US Dollar On a Wild Ride

The Fed’s announcement is probably more pertinent to the US Dollar, and given what was showing just before the announcement, it makes sense as to why they’d want to target the USD. As Justin had also discussed earlier in the day in a separate article, the US Dollar was rallying aggressively on the back of a liquidity crunch. The USD had gained 1.7% when I published around 1PM ET; and that move got very volatile as the Fed’s announcement came out shortly after.

US Dollar Four-Hour Price Chart

US Dollar Four Hour Price Chart

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.

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