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Oil implodes, Dollar retreats while Gold glitters

Oil implodes, Dollar retreats while Gold glitters

It was another painful day for Oil as concerns intensified over the coronavirus outbreak sapping demand for fuel.

WTI Crude and Brent both tumbled over 4.5% as investors became increasingly jittery over the widening crises and negative consequences to global growth. On Wednesday, for the first time ever, the number of new cases of COVID-19 outside China exceeded the number of new Chinese cases – ultimately fuelling fears of a pandemic. Oil prices are expected to remain severely depressed on demand and global growth concerns.  

The technical picture paints a heavily bearish setup for the WTI Oil with prices trading around $46.00 as of writing. A solid daily close above $46.00 may open the doors towards $44.80.

WTI Crude and Brent both tumbled over

Dollar steps off the throne 

On Thursday, the Dollar weakened against every single G10 currency excluding the Pound and Canadian Dollar.

Speculation around the Federal Reserve cutting interest rates in April and two more times in 2020 inspired bears with fresh inspiration. Although the Greenback is still considered as a prime destination for safety, rate cut bets could limit upside gains. Signs of the coronavirus impacting the US economy could threaten the Dollar’s safe-haven status, ultimately fuelling the downside momentum.

The Dollar Index is under intense pressure on the daily charts. A solid breakdown below 98.40 could trigger a move towards 97.80. Should 98.40 prove to be a reliable support, prices may rebound back towards 98.90.

 Dollar weakened against every single G10 currency

A treacherous path ahead for Sterling 

The Pound tumbled across the board on Thursday after the UK government released its negotiating mandate for Brexit talks.

Battle lines were officially drawn after the mandate adopted a hard-line stance. The UK government is seeking a Canada style free trade agreement, no extension beyond the transition period and a decision on whether a deal would be possible by June. More drama and uncertainty will most likely be on the cards when the first round of negotiations kick on 2 March.

This will mean more volatility on Pound crosses, especially the GBPUSD and EURGBP.

Focusing on the GBPUSD, the path of least resistance points south with the first point of interest at 1.2830. A breakdown below this point could open the doors towards 1.2750.

Pound tumbled across the board on Thursday

Euro recovers on Dollar weakness and fiscal hopes 

Euro bulls switched into higher gear on Thursday after Germany considered fiscal measures to counter the negative impacts of the coronavirus outbreak to its economy.

Dollar weakness also complimented upside gains with the EUR gaining over 0.8% against the Dollar.

The EURUSD has the potential to push higher in the short term if a breakout above 1.1000 is achieved. A solid daily close above this point should open a path towards 1.1050.

EURUSD has the potential to push higher

Commodity spotlight – Gold

Renewed concerns over the coronavirus outbreak sent investors rushing towards Gold on Thursday.

The precious metal remains bullish on the daily charts as is trading around $1653 as of writing. A solid daily close above $1660 may trigger a move higher towards $1700. If this level proves to be reliable resistance, prices could slip back towards $1620.

precious metal remains bullish on the daily charts

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.


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