Daily F.X. Analysis, March 04 – Dollar Plunges Amid Fed Rate Cut Decision!
By Eaglefx On March 04, 2020 in Daily Market Analysis
On Wednesday, the greenback hovered near five-month lows against the yen following the U.S. Federal Reserve's surprising 50 basis point rate cut, which sparked more concern about the influence of the coronavirus on the market. Besides, it also sent Treasury yields falling to record lows.
The U.S. dollar also traded around the weakest in nearly two years versus the Swiss franc, with traders gathering to traditional safe havens as rate reductions were considered inadequate to compensate risks postured by the global outbreak of the coronavirus. Whereas, the single currency Euro was one of the currencies to profit most from the broad-based dollar vulnerability as traders trust the Fed will decrease rates more than the European Central Bank.
Economic Calendar
BTC/USD - Daily Analysis
The BTC/USD is trading down just below 1% at its current rate of $8,800, which is around where it has been consolidating at in the time heeding this morning's strong rejection at $8,900. Since the leading cryptocurrency has disappointed to accumulate enough buying pressure to regain its former position within the $9,000 range, it does appear as though further near-term downside could be expected.
Today's price action has frequently consisted of trading sideways around $8,700, but this today's rejection at $8,900 reinforced the hope that the crypto will soon witness further bearish bias.
Despite this, BTC has been able to sustain over a key short-term level that could eventually drove it to rise higher, with one trader recording that survival of this level could mean a reversal to its range highs is expected.
BTC/USD - Daily Technical Levels
Support Resistance
8,656.36 8,905.3
8,534.77 9,032.65
8,285.83 9,281.59
Pivot Point 8,783.71
BTC/USD – Daily Forecast
On Wednesday, the Bitcoin is trading at 8,825, staying mostly above the support level of 8,782. On the hourly timeframe, 50 periods EMA is supporting the BTC/USD pair around 8,780.
The bullish engulfing candle on the hourly timeframe, the BTC/USD has formed a bullish engulfing pattern above the same support level of 8,780. Continuation of a bullish trend may lead to Bitcoin prices towards 8,888 and 8,975. A bullish breakout of 8,975 can lead to Bitcoin prices towards 9,090.
EUR/USD – Services PMI Figures in Highlights
The EUR/USD currency pair failed to continue its bullish trend and dropped from the 8-weeks high level mainly due to the U.S. treasury yields that recovered from the record lows. As the press time, the EUR/USD is trading at 1.1162 and consolidates in the range between 1.1155 - 1.1185, having hit high of 1.1214 on Tuesday. That was the highest level since January 02.
At the data front, the ten-year U.S. Treasury is trading at 0.986%, representing a 7- basis point gain from the record low of 0.916% reached Tuesday. The two-year yield has also recovered to 0.683% from 0.613%.
The treasury yield has recovered on Tuesday, pushing the greenback lower across the board after the decision by the United States Federal Reserve to deliver the rate cut by 50-basis points.
It should be noted that the emergency rate cut delivered to control the negative impact of coronavirus on the economy, while had a positive impact on equities. Although, the sentiment turned bearish and the U.S. markets flashing red because investors are cautious after the rate cut.
On the flip side, the EUR currency worked as a safe-haven currency during the recent periods of coronavirus. This is evident from EUR/USD's near 90-degree surge from 1.0788 to 1.12 seen in the last 8- trading days.
EUR/USD - Daily Technical Levels
Support Resistance
1.1106 1.1224
1.1042 1.1278
1.0924 1.1396
Pivot Point 1.116
EUR/USD – Daily Forecast
Dramatic buying in the EUR/USD pair triggered on the release of U.S. Fed rate cut decision, which drove the EUR/USD prices towards a 1.1215 resistance level. It has now formed a double top pattern, which is keeping the EUR/USD pair under pressure below the 1.1215 area. Technically, the pair should reverse back below 1.1217 level for a retracement until 1.110 and 1.1065.
GBP/USD - U.K. Final Services PMI
The GBP/USD currency pair looking flat on the bullish track and representing 0.03% gains on the day. As we know, the currency pair recently got support from the broad-based greenback weakness after the U.S. Federal Reserve decision to deliver rate cut by 50-basis-points. As of writing, the GBP/USD is trading at 1.2812 and consolidates in the range between the 1.2807 - 1.2832. The upbeat comment from the Bank of England also played their part.
Whereas, the European Union and United Kingdom Brexit talks are proceeding while iNews, the news agency, reported regarding Irish Prime Minister. This suggests that there is a growing probability of a no-deal Brexit at the end of the year. However, in his latest comments, the European Union's (E.U.) chief Brexit negotiator Michel Barnier made a U-turn from his generally observed UK-critic tone while saying that the talks are going positive.
On the other hand, the news came from the U.K. Express that Spain is quietly using the way to have a more considerable influence in Gibraltar after the Brexit. Its also worth mentioning that the Bank of England policymakers, including Governor Carney, appreciated the financial actions like rate cut to control the deadly coronavirus negative impact.
GBP/USD - Daily Technical Levels
Support Resistance
1.2768 1.285
1.2725 1.2889
1.2643 1.2971
Pivot Point 1.2807
GBP/USD – Daily Forecast
The GBP/USD proceeds with its choppy session, staying within a narrow trading area of 1.2725 - 1.2820. The GBP/USD is holding above and below the pivot point level of 1.2807, which is now serving as resistance.
On the 4-hour timeframe, the 50 EMA is holding around 1.2810 level while the GBP/USD is trading below this level. Bullish crossover of this level can extend buying until 1.2896 and 1.3015. While on the lower side, the bearish breakout of 1.2800 can lead to selling towards 1.2725 area. Good luck!