By Orbex
The pound sterling went into a stiff sell-off as Britain grapples with its colossal public health crisis. As the economy is coming to a virtual halt amid the COVID-19 outbreak, the Bank of England cut interest rates to 0.1% to calm nerves.
The government has pledged “whatever it takes” to rescue battered industries. Markets responded favourably with the pound recouping some losses.
The pair pulled back after it broke below last August’s low of 126.50. The bounce is likely to run into selling pressures near the moving averages around 135.00.
Fears of the economic fallout from the coronavirus have put the greenback under the spotlight. Heightened uncertainty has led investors to exit global markets and convert their assets into the US dollar, bidding up its exchange rate in the process.
There is no sign of stabilization yet across markets and it is reasonable to believe that the dollar fever may carry on. The breakout above the major resistance of 0.9850 has put the pair on a reversal course.
Free Reports:
0.9700 is the immediate support, and after a potential retracement, the rally may extend towards the parity.
The New Zealand dollar saw some buying interests at the end of last week as traders welcomed a new set of stimulus measures. The government has unveiled a $NZ12.1bn fiscal package to shore up the economy, while the Reserve Bank has committed to provide additional liquidity and ensure the integrity of the financial system.
In the meantime, a recovering Chinese economy is likely to provide further support to the Kiwi. 0.8540 is the key resistance ahead. A failure to close above it could send the pair to the psychological level of 0.8000.
After the US oil price hit the symbolic mark of $20 a barrel, the question is whether we have seen the bottom. The commodity rose after the US sought to buy up to 30 million barrels for its emergency stockpile.
However, the rally may well be short-lived as the pandemic is yet to peak in developed countries.
Meanwhile, the price war between Saudi Arabia and Russia can only add fuel to the fire. 33 near the moving averages is a critical resistance level should the price find enough momentum. Otherwise, renewed pressure could push the oil below 20.
By Orbex
