The fears caused by COVID-19 are getting stronger as the number of cases increases and new measures of restrictions in many countries rise again. This fact, pushed the investors to the solution of USD which is supposed to be safer in such periods. On the contrary, most of the other currencies dropped, excluding JPY which also has characteristics of a safe-haven asset. Bearish was the trend of the stock markets while the strong USD caused a drop to the commodities as well, especially the gold price had a big drop. As per the stock markets, September is a traditionally bad month.
In the current week, the COVID-10 pandemic will gather again all the investors’ eyes while slowly but steadily we enter into the US elections period. This week also contains many news & announcements (as it usually happens at the beginning of every month), dominating mostly by the US Unemployment Rate and NFPs on Friday.
EURUSD (Euro vs US Dollar)
It was a week of a heavy drop for EURUSD which opened at 1.1840 and closed at 1.1630, as USD was strong and EUR was weak enough because most of the European governments state new restrictions due to the second wave of COVID-19. The pair is approaching the support of 1.15 which may change its outlook and with such a strong USD, we may see more bears in the near future. Sell positions is our selection for this week although the environment is very fragile as we’re moving ahead the US elections. Financial Times’ post regarding Donald Trump who (according to Financial Times) paid no taxes in the last years has already causes turbulences while the debates are about to begin as well. In Europe, there are no important economic announcements this week but there is the speech of Christine Lagarde on Monday but in USA, there is a strong interest about the results in the job market that will be released next Friday.
GBPUSD (Great Britain Pound – US Dollar)
Bearish was the last week for GBPUSD, which opened at 1.2922 and closed at 1.2740. The negotiations between EU and UK are into a more hopeful stage and will start again this week but the new restrictions in UK due to COVID-19 second wave. The strong USD gives a high probability for a further drop so we prefer sell positions for one more week. A possible bearish breakout of 1.2670 will define a certain downtrend but we should also keep our eyes to the UK GDP announcement on Wednesday.
USDJPY (US Dollar – Japanese Yen)
We saw a clear bullish reaction for USDJPY in the week that passed by since it opened at 104.50 and closed at 105.56. The US 10-year treasury yield is moving lower at 0.65% but the strong USD dominated the other factors. The higher probability is for carrying on the bulls even if JPY gathers safe-haven asset characteristics as well. We can try some buy positions on USDJPY this week.
EURJPY (Euro – Japanese Yen)
It was the third in a row bearish week for EURJPY since it opened at 123.77 and closed at 122.78. The strength of JPY as a safer solution and the weakness of EUR as the whole Europe is in the middle of the second COVID-19 wave may contribute to a further drop of the pair. By keeping in mind that a very critical support exists at the price area of 122, we’re keen to open sell positions.
EURGBP (Euro – Great Britain Pound)
Slightly bearish week for EURGBP since both EUR and GBP were weak enough. The weekly open price was at 0.9152 and the close price last Friday at 0.9123. The dominating factors are the updates around COVID-19 and Brexit. It takes a bearish breakout of 0.9070 in order to have a more solid downtrend (in this case we prefer sell positions) and it takes a bullish breakout above 0.9150 in order to open buy positions.
USDCAD (US Dollar – Canadian Dollar)
Third week in a row of a bullish reaction for USDCAD and this one was the strongest. The weekly open price was at 1.3195 and the weekly close price was at 1.3385. The strong USD and the oil prices drop gave the stigma of this picture. A possible bullish breakout above 1.3420 may open the road for a pair’s return to the price area of 1.36 – 1.37 which was a usual price area of the recent summer. We prefer buy positions this week.
USDCHF (US Dollar – Swiss Franc)
In last week, we saw the biggest weekly rise of USDCHF since the last March. The pair opened at 0.9095 and closed at 0.9288, almost 200 pips higher. The strong USD leaves an open window for a further rise and as the price area of 0.9360 is a realistic target, we prefer buy positions this week.
AUDUSD (Australian Dollar – US Dollar)
Last week we saw a huge drop for AUDUSD, taken for the beginning of the pandemics as the pair opened at 0.7287 and closed at 0.7027. AUDUSD is flirting with the milestone price of 0.70 and a possible breakout will give a heavy downtrend outlook to the pair. The drop in the commodities prices and the strong USD pressed the pair very much although we cannot exclude bullish reactions around 0.70. Maybe we should stay out for one week.
It was the fourth bearish week in a row for SP500 which closed at 3,284 points and losses that touched 1%. September was a heavily corrective month for the Index after the rally that took place from the end of last March. The sector of technology hurts a lot while the new aid package from FED is still in the papers. The jobs market in USA that will be released this Friday will affect a lot the US stock markets. Technically speaking, a drop below 3,200 points will sink the markets’ sentiment even more but on the contrary, an approach of 3,400 points may give a tone of optimism. Trusting the second scenario, we’ll try long positions this week.
Heavily bearish week for DAX30, which closed at 12,550 points, having performed losses more than 4%. We observe that the European stock markets correct in more tension than the US ones and as long as the Index is below 13,000 points, we cannot have optimism. Without excluding opportunistic bullish reactions, a very important and critical factor for the future of DAX30 will be the retention of 12,200 points. We prefer short positions for the current week.
It was a bearish week for FTSE100, with a weekly close price at 5,850 μονάδες, almost 2% lower. The pandemic of COVID-19 that affects UK does not allow optimism although there are some signs for a recovery. We’d better stay out & wait for one week.
Last week closed with a big drop in gold prices. Gold closed at $1,863.50, with losses like 5%. The main reason for that is the strong USD (we don’t forget that gold is denominating in USD). Τhe new package of economic aid in USA is still expected while the Unemployment Rate announcement by the end of this week will have a critical role as well. The price area of $1,830 has become very important but bullish reactions above $1,900 are able to reverse the negative outlook for gold. We’ll try some low-risk opportunistic long positions.
Corrective movements for oil last week, as the futures closed a bit above $40, with losses close to 2%. The picture of oil’s fundamentals has not changed importantly, except the USD strengthening. This stabilization of prices during the last weeks around $40, shows a new balance condition but it also shows a hesitation of the investors as the oil demand remains low. As per the production, OPEC requests discipline to the latest decisions for production cuts but the new headache is called Libya because the unsteady political situation in the country may cause issues. The outlook of oil this week is rather neutral to bearish so we may try short positions.
The week closed for Bitcoin with marginal losses, closing at $10,780, about 1.3% lower. It is obvious that for this period of time, the new balance price zone is between $10,000 and $11,000. Something important to notice is that on Friday there is an expiry of a big number of Bitcoin options, with value of $1 bn. The maximum prices of both put and call are above the current levels. Also, the number of calls is significantly higher than the number of puts and this favors a bullish movement. A bullish reaction above $11,000 will give an extra positive tone and we’ll try long positions for the current week.