Markets can remain irrational longer than you can remain solvent.
The euro tumbled to a low of $1.0750 in the aftermath of dismal Euroland PMI data on Thursday, while the EU agreed last night to set up a joint financial fund of up to 2 trillion euro to help recover from the pandemic but delayed divisive details of the program until summer.
The cable strengthened to a high of $1.2413 before paring some of its gains to $1.2330, defying the bearish UK PMIs for April, as market activity appeared immune to new data about the disastrous economic fallout from the coronavirus.
The yen mildly bid at 107.65 per dollar after a spinning top near 108.03, paying little heed to the slowdown in the Japanese inflationary pressures.
The Aussie hammered to $0.6350 as sentiment deteriorated after reports crossed the wires that Gilead’s antiviral drug, Remdesivir failed its first trial for coronavirus patients.
The South African rand continued scaling lower for the fifth consecutive days to 19.17 against the greenback following President Ramaphosa's national address on Thursday that the country would shift to a “risk-adjusted strategy through which we take a deliberate and cautious approach” to restarting economic activity.
The pair rallied by 10 cents to 40.40(selling) on the domestic market.
- From an Elliott Wave standpoint, USDCHF could potentially unfold into compelling impulsive Wave C of the zigzag correction of Wave (2) to a narrowing region 0.9550 (50% retracement of Wave (1)) to 0.9395 (100% projection of Wave A through B) in the near term trend, from the downside bias from April 6th high of 0.9797.
- Price could immediately start to shoot back up into Wave (3) on a longer perspective.
- Piercing above the resistance 0.9905 would endorse the structure.
- Alternatively, broader bearish invalidation of Elliott Wave Structure rest at 0.9191 of March 9th low while Relative Strength Index signals a bullish recoil higher for the pair.
• 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.
• At 107.70 today, USD/JPY is percolating towards its target from 110.41 to 107.84, as per chart.
• On a side note, resumption of a bullish USD/JPY would mark an invalidation of the Elliott Wave structure above 112.22