Greenback performed well against major currencies in March amid coronavirus fears and economic concerns. The Dollar Index jumped above 100 for the first time in more than three years as demand increased for safe-haven assets. While major currencies saw a recovery of late as global stock markets have found their footing, but concerns over how the magnitude of global economic devastation is still on the mind of investors.
Governments around the world are announcing economic stimulus packages in order to cushion the economic impact as a third of the world’s population is living under lockdown regulations. US President Donald Trump signed the historic $2 trillion stimulus package on Friday March 27, and the Dollar took a hit subsequently as investors started buying equities in hopes that the $2 trillion stimulus package will be enough to save the US economy.
The pandemic is showing little signs that it is going away soon, as the number of cases continues to be on the rise with US leading the world with close to 190,000 confirmed cases at the time of writing. USD investors are keeping a close eye on this week’s number as it might surpass the last reading at 3.28 million.
Economists at the St. Louis Fed projected that the unemployment rate could go as high as 32.1%, which would translate to 47 million Americans losing their jobs. If this is as bad as things could get, this scenario would develop a strong case for investors to run for safety in the form of the DXY, but as of now, the Dollar is under pressure against JPY, GBP, and AUD.
On the technical side, USDJPY on the 4-Hour timeframe has been following a downtrend since March 25. The price registered the lowest level of the period under study at 107.099 on March 30. As of writing, the USDJPY pair is hovering around 107.250 with negative Moving Average Convergence Divergence and Momentum below the 100 level.
The pair is currently trading below the 50-period simple moving average with Relative Strength Index below 50 which supports the recent bearish price move. Resistance level lies at 111.702 while the support level lies at 107.099. Bears are trying to push the price below the 107.000 level but a push above 108.000 could strengthen the argument for a bullish move.
Written on 02/04/2020 by Bilal Jafar, FX Trainer at FXTM
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This article was originally posted on FX Empire
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