Indices carry through the rebound – Market Analysis – March 26

Indices carry through the rebound – Market Analysis – March 26

Indices continued the rebound after last week’s carnage; currencies show mixed performances

Stock markets continue to behave positively, recovering part of the enormous losses of the previous weeks. Fiscal and monetary policy measures seem to have had an effect, although many unknowns still need to be cleared for the situation to return to normal.

Everything will depend on the duration of the lack of activity, and in this sense, the market is increasingly more attentive to the evolution of the numbers of affected in each country.

In Europe, the worst figures correspond to Italy and Spain, but in the United States, the trend is beginning to be worrisome despite the optimism that its president tries to convey. China has announced the closure of its borders abroad, which is certainly not a good sign.

The king (of the market) is naked!


The US Dollar has continued to decline due to the closing of long positions that had accumulated due to the lack of liquidity in short-term swaps.

The fall in interest rates is also influencing the weakness of the Dollar as a result of the enormous injection of liquidity from the Fed; the Dollar has no longer in its favor the difference in interest rates with other currencies but the fact that the evolution of the pandemic in the United States being very negative is influencing the market as well. Its safe haven currency status may be in jeopardy if the health situation worsens.


This scenario is being reflected in USD/JPY, which, after reaching highs at 111.66, lost yesterday more than 1.5%. The figure of jobless claims, 3.28 M, the highest in history, has added pressure to the US currency.

The British Pound


Pound Sterling was the currency most benefited yesterday both in its quotation with the Dollar, which appreciated more than 2% and against the Euro.

GBP/USD was one of the most punished pairs at the beginning of the crisis, but the recovery is durable and has already surpassed the 38.2% Fibonacci level of the entire downward leg and is heading towards 50% Fibonacci at 1.2303. There is no fundamental data behind this movement, and it is possible that the best relative evolution of affected numbers in the UK is being taken into account.


EUR/GBP has also performed positively for the Pound. The pair is forming a descending triangle pattern with decreasing highs, which, if activated with a close below 0.9060, opens a downward path of great magnitude potentially up to the 0.8650 zone, say most market analysts.


Crude Oil


Yesterday, Brent Oil fell more than 3%, approaching the minimum levels of the range where it has been moving in recent days.

Below $24.60, there is no support until $20. A G20 statement was expected in the market, announcing an agreement with measures to prevent the collapse of the Oil price that has not taken place. Also, the US Energy Department announced that it would not buy Oil for the country's strategic reserves because Congress does not assure the budget for this purchase. Hence, the downward path is likely to continue.



By: Miguel A. Rodriguez Ruiz

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The information presented herein is prepared by CAPEX.com and does not intend to constitute Investment Advice. The information herein is provided as a general marketing communication for information purposes only and as such it has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

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.