Week in review: Is volatility here to stay?

– Investors entered the trading week adopting a cautious stance as the number of coronavirus cases worldwide exceeded 10 million, with the death toll topping 500,000.

Markets displayed sensitivity to Covid-19 fears during the early parts of the week but still concluded the quarter on a risk-on note thanks to positive economic data from the world’s second-largest economy.

So much has happened the start of 2020 with the shocking events sparking explosive levels of volatility. On Tuesday, we discussed the FX winners and losers of 2020 so far, highlighting how the Dollar and Japanese Yen were top performers year-to-date.

Mid-week the risk pendulum swung back and forth thanks to confusing data from the United States. As the resurgence of new coronavirus cases strained global sentiment and fuelled lockdown fears, most started to question what could be next for markets after the Q2 rally?

The main risk event was June’s US jobs report on Thursday which smashed market expectations. Payrolls surprised by rising 4.8 million while the unemployment rate plunged to 11.1% but the devil is in the details. With the number of permanent job losses rising and average hourly wages on a slippery decline, it may be too early for any celebrations.

Given how the coronavirus chaos, global growth concerns, US-China trade tensions and Brexit among many other negative themes are set to rock sentiment over the coming months, could volatility be here to stay?

Join our webinar on Monday 6th of July at 9:00 am BST as we discuss this in addition to our outlook for the new trading month!

Dollar Index yawns into the weekend 

The Dollar Index’s (DXY) price action on Friday was reminiscent of watching paint dry. Prices remain in a range on the daily timeframe with support at 96.00 and resistance at 97.80. Should 97.15 prove to be a pivotal level, prices may rebound towards the 97.80 in the new trading week.

 

EURUSD indecisive as usual 

Seems the Euro is struggling to decide whether to push higher or sink lower against the Dollar. Some fresh direction may be provided in the week ahead. Investors may be keeping a close eye on how prices behave between the 1.1270 and 1.1200 level.

 

GBPUSD ends week on a flat note

Talk about an anticlimactic end to a volatile week. After displaying explosive levels of volatility earlier in the week, the GBPUSD has entered standby mode for now. A breakout/down setup could be on the cards here with support at 1.2250 and resistance and 1.2550.

 

USDJPY on standby 

Same story with the USDJPY, much attention should be directed towards the 107.00 support and 108.00 resistance level.

 

Gold grinds higher 

A solid weekly close above $1765 should open the gates towards $1796 and $1800. If the $1765 level gives way, then prices may sink back towards $1747.