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By XE Market Analysis May 20, 2020 2:16 pm
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    XE Market Analysis: Asia - May 20, 2020

    The DXY fell to near three-week lows of 99.01 on morning trade on Wednesday, later recovering some lost ground, and retracing to near 99.25. Wall Street rallied, and Treasury yields inched higher, as hopes for economic recovery set in. There were no data of noted. EUR-USD rallied to 1.0999, up from 1.0950, later heading back under 1.0975. USD-JPY slipped from 107.70 to 107.34, before bouncing to 107.56. USD-CAD ranged between 1.3868 and 1.3924. Cable meanwhile, topped at 1.2287 before selling off to 1.2226 lows.

    [EUR, USD]
    EUR-USD traded to near three-week highs of 1.0999, up from early lows of 1.0950. The pairing has since back away from the 1.1000 level, with light profit taking seeing the Euro slip back to 1.0975. EUR-USD has put in four straight days of gains, with the move largely coming as USD safe-haven demand has ebbed now that economies are beginning to open up again. EUR-USD support comes at the 50-day moving average at 1.0900, with resistance up at 1.1000, a psych level, then at 1.1017, which marks the 200-day moving average.

    [USD, JPY]
    USD-JPY printed intra day lows of 107.34, in late-morning, down from overnight highs of 107.98. The pairing has been on a slow decline since the end of the Asian session. Persistent USD weakness, which has seen the DXY hit lower daily lows for the past four-sessions has weighed on USD-JPY, despite the risk-on backdrop seen on Wednesday. Support is now at 107.00, with resistance at the 50-day moving average of 107.83.

    [GBP, USD]
    Cable lifted out of the lower 1.2200s, reaching an intraday high at 1.2287 in early N.Y., later easing back under 1.2230. The pair remains in the lower reaches of a consolidation range that's been enduring since April, which followed the recovery from the 35-year low seen in March at 1.1409. We expect the pound's upside potential to remain curtailed for now, given risk of the UK leaving its post-Brexit membership of the EU's single market at year-end.

    [USD, CHF]
    EUR-CHF pulled back from the two-month highs of 1.0662 seen on Monday, though remained over the 1.06 mark through much of the session. The SNB has successfully been putting a cap on the franc, which has seen EUR-CHF in recent weeks skirt along just above the five-year low that was first seen on March 9th at 1.0505 without breaching it. Weekly sight deposit data out of Switzerland has pointed to the extent of SNB franc selling over the pandemic crisis period, which was most acute in March before basing out as global governments and central banks acted with interventions and stimulus packages.

    [USD, CAD]
    USD-CAD faded to 1.3868 lows, just above Tuesday's May low of 1.3867, and down from 1.3950 highs seen in London morning trade. The usual suspects supported the CAD through the morning, including still firm oil prices, and a risk-on backdrop. Canada's rather cool April CPI report had little FX impact, as markets continue to look through horrible data during the pandemic. USD-CAD later bounced over 1.3920 as oil prices faded lower. The April 30 low of 1.3850 is next support, and reports of sell-stops under the level have been rumored.

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