USDJPY and EURGBP

The news broke yesterday that the Gilead’s developed drug, Remdesivir met its primary endpoint in trials. According to NIAID, the National Institute of Allergy and Infectious Diseases, the drug proved to be effective in the treatment of patients with Covid-19. Initial test showed that the drug reduced treatment times from 15 to 11 days. The treatments can be as short as 5 days but may last 10 days in more severe cases or if early intervention is not possible. It is most effective when given as early as possible once someone has contracted the virus. The US-led trial, however, which began in late February, is thus far the largest to investigate remdesivir and is technically the most robust. In a smaller Chinese trial of 237 patients, doctors found no positive effects of administering the drug compared with a control group of adults, except for those patients who required ventilators. But this study was deemed too small to provide adequate, reliable data. The US study of 800 patients, a portion of whom received the drug while the rest received a placebo, with the trial conducted at multiple sites across the world, was a double blind, with neither the patients nor their physicians aware of which group they belonged to, in order to eliminate unconscious bias. Remdesivir belongs to a class of drugs that act on the virus directly, as opposed to controlling the abnormal and often lethal autoimmune response it causes. It mimics one of the four building blocks of RNA and DNA and gets absorbed into the virus's genome, which in turn stops the pathogen from replicating. The treatment is the first win for the medical community in the war against Covid-19. Development of a vaccine to prevent contracting the virus is still in its infancy. The news was greeted with elation on the stock markets with US Indices soaring higher to close over 2% on the day. European indices were also bumped higher and the positivity has continued overnight. US Advance GDP has fallen to -4.8% from -4.0% expected and 2.1% previously. The US FED left Rates unchanged at <0.25%. FED Chair Powell said that rates would stay at lower bound until economy has weathered recent events and gets on track to achieve unemployment and inflation goals. He added that the public health crisis will weigh heavily on the economy, employment and inflation in the near term. The FED expects April unemployment to be in the double digits. Gold moved higher on the FED decision and is trading around 1717.00 this morning.

Flash Eurozone GDP is expected to fall to -3.7% from 0.1% previously, this morning. The ECB is expected leave rates at 0.0% this afternoon. Canadian GDP is expected to rise to 0.2% from 0.1%. US Unemployment Claims are forecast to come in at 3.5M from 4.427M previously. Chicago PMI is forecast to fall to 38.0 from 47.8 previously.

USDJPY  

 

The USDJPY has sold off again after it found resistance at the 111.700 level with a move that took price down to 107.000 area. The pair has continued the move lower and is now trading at 106.420. Price fell sharply through the 107.000/106.950 levels. In the short term the move higher has been retraced by about 50%. The 106.300 may be used as support in the event of a loss of this area. A test of this level and a failure to find support may open the way to the 106.000 area, which might lead to further selling taking hold and pushing price into the support area around the 105.800 mark followed by 105.000. The selloff in August found support at 104.450 and produced the rally to the current high at 112.228.

In the short term the 107.000 area is now acting as resistance, followed by 107.685 and 108.000, with the 108.480/108.500 area above. A rally above the 108.500 level may seek to take price up to engage the 109.400 area of the lower high which is followed by the 110.000 round number. This area has acted on price in the past and was retested as resistance in February, with a breakout to the high at 112.227. A break above this area may open the path to the pair potentially attempting to gain a foothold above this resistance and establish a base to engage the 113.000 area. A break above this level may seek to test the 114.000 level followed by the potential resistance at 115.000.

EURGBP

 

The EURGBP chart is showing that the pair has broken down from 0.9500 level and is currently trading around 0.8712. The pair traded up to the 0.9500 area and found resistance in March. The move lower found some support at 0.9000/0.9070, but this failed at the end of the month. Support in the short term may now be found around the 0.8682 area which formed double bottom, and led to a retest on the 0.8865 area. A loss of this level may push price down to 0.8660 level. Support may be seen at 0.8645 followed by 0.8620/0.8600. Below this level, the 0.8500 area may be supportive again, followed by the 0.8412 area. The low at 0.8276 from December and then the 0.8250 level may also be used as potential support for the pair.

The 0.8800 area may now form as resistance going forward, followed by the 0.8850/0.8863 area where price has formed a lower double top. The pair is now in a trading range from 0.8685 to 0.8865. A break out higher may test the 0.8910 level, ahead of the 0.9000 round number. The 0.9072 area may also be resistive to any advance higher. Above this area the 0.9250 area comes into play followed by the August high around 0.9323. The current high at 0.9500 remains the level to beat for buyers. A break higher may seek to test the 0.9550/0.9560. Beyond this the potential resistance area at 0.9620 might be used ahead of the 0.9700 level. The next area of interest may be found at 0.9720, followed by 0.9750 which may also be used as resistance to any potential move higher, while above the area the 0.9800 area may further resist attempts to push price up to the 0.9900 level. The round number level may also come into play at 1.0000.

Phillip Konchar

Core Spreads

Core Spreads is financial trading as it should be. No noise – just tight spreads on thousands of markets.

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