The U.S Dollar and the Japanese Yen continue to hold on to gains accrued at the start of the week on oil prices plunging to record lows. A plunge in oil prices is forcing investors to rush to safe-havens, amidst growing concerns about the outlook of the global economy.
Oil Extremely Bearish
The U.S Dollar is flirting with two-week highs against a basket of other major currencies after rising to the $100 level. The greenback is holding on to the gains despite oil prices bouncing back from negative territory recorded in the Monday trading session.
A bounce back in oil price has done little to strengthen investor’s confidence, as outlook in the oil market remains extremely bearish.
TIME : 22-04-2020
PIVOT : $13.02
TECHNICAL VIEW : Short below $12.02
TARGET : $6.54
Crude prices are expected to remain at all-time lows given the glut in supply in the market. Demand plunging to all-time lows due to lockdowns triggered by the COVID-19 pandemic should continue to mount pressure on oil prices.
Dollar- Yen Strength
While oil prices have bounced back, they are still down by more than 80% from January levels. The plunge is already having a ripple effect with sentiments in the stock markets having turned bearish in the recent trading session. With investors, bracing themselves for a prolonged economic recovery focus has shifted to safe havens of the likes of the U.S Dollar in a bid to store wealth.
The U.S Dollar and the Japanese Yen remain steady against oil sensitive currencies such as the Canadian Dollar and Norwegian Krone. The Canadian Dollar and Norwegian Kroner are under immense pressure given the increased risks of oil prices remaining subdued at all-time lows.
The greenback continues to advance against Asia currencies, having gained the most against the New Zealand dollar with NZD/USD pair plunging to lows of $0.5959. The New Zealand Dollar has mostly been hammered by the country’s central bank talk of negative interest rates.
The EUR/USD pair, on the other hand, remains range-bound at lows of $1.0856. The British Pound is also under pressure against the dollar, as it remains subdued at two-week lows amidst growing concerns about the British economy.