Currency technical overview – Market Analysis – March 30

Currency technical overview – Market Analysis – March 30

After a few hectic days, volatility and overall price movement decrease

Volatility in the markets has decreased in recent days and is approaching lower levels of tension, although it is still early to rule out future rebounds. The VIXX index fell yesterday to levels seen earlier in the month (around 50.40).


In this scenario, the stock markets, both in Europe and in the US, experienced slight increases showing that the monetary and fiscal policies implemented by the authorities of most countries in the world have served to calm investors, even if only for the moment.

In Europe, the ECB has managed to tackle the widening of the spreads between peripheral sovereign bonds and the Bund, which, at the beginning of the crisis, made investors fear episodes similar to those of the Great Depression in 2012, especially in the case of Italy. That would be the country most affected by this situation, given its enormous sovereign debt burden.

But in Europe, a new front is opening, which is the need for mutualized debt issuance so that countries such as Italy and Spain can face the enormous expense that is approaching them to raise their economies after the prolonged period of economic slowdown.

Countries such as Italy, Spain, France, and Portugal are in favor of this measure, but Germany and the Netherlands refuse it and propose other solutions. If such clear disagreement continues, it will cast doubt on the stability of the Euro area, and therefore Euro would suffer the consequences.

EURO head to head to major currencies

At the moment, the single currency remains relatively stable although it continues to lose value against the Pound, partly due to this circumstance.

EUR/GBP broke down a descending triangle, has drilled the 61.8% Fibonacci level at 0.8955, and has its next support zone around 0.8770.


However, the Euro remains more stable against the Dollar and has even appreciated slightly against the US currency in the last week. The weakness of the Dollar links to the fall in Treasury yields as a result of the Fed's implementation of the QE bond purchase program. TNOTE10 has continued to rise in recent days with a current yield of 0.68%, close to the historical lows seen last on March 9 last.


Historically, the price of the Dollar has been firmly and directly linked to the yield of treasuries, mainlyUSD/JPY.

In a risk-off scenario that will continue to dominate the market in the coming days and with treasury yields at historic lows, USD/JPY will continue to experience downward pressure, according to the estimates of most market analysts.

At the moment, it needs to close below the zone between 107.50 -107.70, where the SMA 4h 100 and the Fibonacci 38.2 retracement corresponding to the bullish section between March 9 and 22 pass, to continue its downward path towards 105.22 61.8% Fibonacci.


By: Miguel A. Rodriguez Ruiz

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Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience or current financial situation.

Therefore, Key Way Investments Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the information presented herein. Past performance is not a reliable indicator of future results.