Markets are never wrong, but opinions often are.
The shared currency rallied to $1.0940 after the EU agreed on half-a-trillion euros worth of economic stimulus relief package to rescue their economies, heavily battered by the coronavirus pandemic.
The Cable soared to $1.2460 on Friday, cheering the UK PM Johnson’s exit from the Intensive Care Unit ahead of the US Consumer Price Index figures due today.
The yen jostled to 108.20 against the greenback on an upbeat tweet on early Friday from US President Trump that evoked his readiness to support farmers, cattlemen, ranchers, and producers while Fed announced new lending plans of $2.3 trillion in support for the economy.
The Aussie rocketed to $0.6343 on broad-based dollar weakness, shrugging off China’s March month CPI and PPI drop below downbeat forecasts.
The South African's rand, accounted for its risk-on nature, mounted to 17.83 per dollar before easing to 18.03 this morning as South African ministers will take a 33% pay cut for the next three months, pooling funds towards social and economic relief measures to help the country weather the Covid-19 pandemic.
The pair firmed at Rs39.75/USD(selling) on the domestic market.
• After rallying to the downside from a high of 112.22 to 101.17 amid global pandemic threat, USD/JPY has been in a correcting mode since 9th March 2020 and seemed to have recently completed an W-X-Y Double Zig-Zag structure of Wave (2) reaching a high of 111.64 on 27th March 2020.
• Two strong indicators were flashing a trend reversal: ending diagonal at Wave 5 of Wave c and bearish RSI divergence.
• On the hourly chart, as per Elliott Wave analysis, the pair might resume its downwards trend targeting 100.64 - 93.78 to unfold Wave (3), a projection of 100%-161.8% of Fibonacci level.
• USD/JPY is percolating towards its target from 110.41 to 107.84, as per chart below.
• On a side note, resumption of a bullish USD/JPY would mark an invalidation of the Elliott Wave structure above 112.22
The Single currency plunged to a low of $1.0771 last week, before trimming back some losses to $1.0825 this morning, as safe-haven demand boosted the U.S dollar higher across the board.
On a technical perspective, the EUR/USD appears to be tracking the bearish Head & Shoulders (H&S)pattern highlighted last week.
The H & S neckline, as illustrated on the 10 mins chart, could possibly act as magnet in the coming sessions that would propel the EUR/USD higher near $1.0850/75.
However, the pair still remain vulnerable to further downside possible near $1.0700 (H &S target level).