Market News and Charts for May 11, 2020
Hey traders! Below are the latest forex chart updates for Monday’s sessions. Learn from the provided analysis and apply the recommended positions to your next move. Good day and Good Luck!
In the matchup of two safe-haven currencies, the US dollar will reign supreme in the coming sessions. Although the pair is expected to make minimal movements as bulls and bears fight a close tug of war, the buck will ultimately succeed in pushing the pair higher towards its resistance line. The Swiss National Bank’s chairperson Thomas Jordan said that there are no alternatives for the national bank’s ultra-loose monetary policy. The SNB official then added that the bank is not happy about its negative interest rate that is currently sitting at -0.75%. Aside from that, Jordan said that the Swiss National Bank is also ramping up its foreign currency purchases to prevent the franc from further rising. Meanwhile, as for the US dollar, its currently also feeling the pressure of the grim results shown by the ADP nonfarm payroll report and initial jobless claims results from last week. Investors are also cautious as it may prompt the authorities to unleash another stimulus.
The Czech koruna is greatly benefiting from the optimistic mood of the global market. However, despite the support, it’s still no match for the US dollar as evident on the pair’s trajectory. The USDCZK exchange rate continues to hold on to its bullish momentum and is on track to climb to its resistance area in the coming sessions. However, it’s widely believed that bearish investors will force a reversal after the pair surged to its resistance, using it as a boost for their rally to regain their losses in the previous sessions. See, the main wave of coronavirus pandemic concerns is starting to subside, and this gives other currencies chances to reclaim their losses from the greenback. The world markets are currently thriving thanks to the fiscal and monetary expansion which ensured inflow of liquidity. The main weakness of the koruna now is the initial reaction of the significant reduction in the Czech National Bank’s official interest rate.
Despite the easing demand for safe-haven assets, the euro to Swiss franc trading pair continues its downward trend. The pair is projected to contract downwards to its resistance as the Swiss franc continues to appreciate in value. Apparently, the Swiss National Bank doesn’t appear to be happy that the Swiss franc is continuing to rally and has even raised its efforts to prevent the Swiss franc from surging. Meanwhile, the euro is pressured by the latest forecasts of the European Commission that the eurozone economy will drop by a record of 7.7% this year thanks to the pandemic. The economic projection was released last Wednesday. According to the report, inflation will most likely disappear thanks to the coronavirus and that both public debt and budget deficits will spike as the whole block struggles to offset the virus. The whole region is facing a great economic shock that seemingly rivals that of the Great Depression.
Bearish investors are advised to hold on tight as the pair is widely projected to rally once again in the coming sessions. The reason? Bulls are expected support from Brexit related news that will weaken the British pound. Apparently, the euro is also weakening thanks to the recent forecasts of the European Commission for the outlook of the block’s economy. Aside from that, the recent ruling of a German court last week prevented the euro from gaining in the previous sessions. Luckily for it, the momentum is believed to come in favor of bulls. Moreover, the meeting between the negotiators of the United Kingdom and the block are going to take place virtually. The UK also appears to be adamant that it will not ask for an extension on the last day of June. There are also no major economic data from both the UK and the EU scheduled today, so investors are waiting for further guidance from reports that are scheduled due later this week.
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