Top trade setups in forex – COVID 19 in highlights!

The U.S. stocks ended lower, halting a powerful three-session rebound. The Dow Jones Industrial Average shed 915 points (-4.1%) to 21,636, the S&P 500 lost 88 points (-3.4%) to 2,541, and the Nasdaq 100 was down 308 points (-3.9%) to 7,588.

Shares in Energy (-6.93%), Consumer Services (-5.55%) and Automobiles & Components (-4.84%) sectors came under pressure.

Norwegian Cruise Line (-23.5%), Royal Caribbean (-15.1%), Carnival (-19.1%), Apache Corp (-15.6%) and Devon Energy (-14.5%) sank to the bottom of the S&P 500 losers list.

XAU/USD - Choppy Session Continues to Play

Gold eased 3 dollars to $1,626 an ounce. Most of the choppy session in gold was driven by a series of bullish and bearish fundamentals from the U.S. economy. At the weekend, the number of confirmed coronavirus cases in the U.S. surged close to 140,000, with the related death toll crossing above 2,400.

The U.S. Centers for Disease Control and Prevention (CDC) issued a travel advisory urging citizens of New York, New Jersey, and Connecticut to refrain from non-essential domestic travel for 14 days. And President Donald Trump extended social-distancing guidelines through April 30.

U.S. official data showed that personal income rose 0.6% on month in February (+0.4% expected), and personal spending increased by 0.2% (as expected).

The University of Michigan's Consumer Sentiment Index (final reading) posted at 89.1 in March (90.0 expected). European stocks returned to negative territory as the coronavirus crisis deepened. Following Prince Charles, U.K. Prime Minister Boris Johnson and Health Secretary Matt Hancock both tested positive for the COVID-19 virus. Consequently, the demand for safe-haven gold is gaining bullish momentum, while the positive fundamentals from the U.S. are keeping it in selling.

XAU/USD - Daily Technical Levels

XAU/USD - Daily Trade Sentiment

On Monday, the precious metal gold continues to trade choppy, following mostly the same wide trading range of 1,594 - 1,642. The yellow metal gold is probable to gain immediate support at 1,609, and under this, the next support is expected to be located around 1,594.

In contrast, the bullish breach of 1,623 levels can point gold prices towards the next resistance mark of 1,642. Chances of a downward trend remain high, considering the recent candles on the 4-hour chart.

USD/CAD - Drop in Crude Oil Prices Keeps the CAD Bearish

The USD/CAD currency pair flashing green and rose to their highest level above 1.4100 from the one-half week lows, placing a fresh session high at 1.4110 in the last hours mainly due to broad-based U.S. Dollar recovery. The fresh declines in the oil prices also gave some support to the pair because, as we know, the reductions in oil prices tend to weaken demand for the commodity-linked currency loonie, which ultimately sends the pair higher.

The USD/CAD pair stops its recent sharp pullback from multi-year tops, which was supported by fresh greenback bullish moves and fresh losses in the oil prices. At the USD front, the U.S. dollar is getting support once again against risk currencies as a safe-haven demand due to fresh losses in the equity markets. The dollar index, which tracks the value of the greenback against majors, is currently seen at 98.73, up 0.42% on the day.

The reason behind the pair bullish trend could also be the fresh declines in the oil prices, which tend to diminish demand for the commodity-linked currency the loonie.

The current headlines about coronavirus fueled concerns of a global recession in the wake of the coronavirus-led travel bans and added to worries about decreasing oil demand, whereas the WTI crude oil demands around the world may drop by 20% because 3 billion people are stuck in lockdown. Saudi Arabia and Russia both are not showing any signs of stepping back from increasing supply in the wake of the ongoing price war. With a massive drop in oil prices, the demand for the Canadian Dollar is also suffering, which is sending the Canadian Dollar lower.

USD/CAD - Daily Technical Levels

USD/CAD - Daily Trade Sentiment

On Monday, the commodity currency pair, the USD/CAD, is trading with strong bullish bias, having soared dramatically to trade at 1.4175. As we can see on the 4-hour timeframe, the USD/CAD pair has crossed over 50 periods EMA at 1.4002 and has also closed a bullish candle over this level, which is now opening further room for buying until 1.4280. 

On the higher side, the USD/CAD currency pair is likely to find next resistance around 1.4280 level, and violation of this level may extend bullish bias until the next resistance level of 1.4350. Let's consider staying bullish today over 1.4145.

AUD/USD – Ascending Triangle Breakout

The AUD/USD is flashing red and dropped to their lowest level of 0.6113 from the 2-week high mainly due to risk-off market sentiment in the wake of a growing number of coronavirus infected peoples. The broad-based U.S. Dollar also keeps the pair lower. The AUD/USD is trading at 0.6127 and consolidates in the range between the 0.6113 - 0.6184.

The United States policymakers will not avoid any strong action to control the deadly coronavirus (COVID-19) impact. They are currently using multiple ways of supporting, like rate cuts or trillions of dollars worth of Quantitative Easing (Q.E.) and other measures. The latest measures were $2.2 trillion that got approval from the House of Representatives on Friday to reach President Donald Trump's table for being the law.

At the coronavirus front, Italy marked as the second-highest country of confirmed cases in the world after the United States (105,470). Total cases are 92,472 confirmed, marking up the highest death rate in the world. An increased number of cases in Italy and the U.S. are keeping the Dollar on knees, which should drive the bullish trend in the AUD/USD currency pair.

On the other hand, the Australian Prime Minister recently said that the government would give further income to support the economy as indicated that the next assistance package will be more prominent as compared to the old one. Australian Treasurer, Joshua Anthony Frydenberg, has announced fresh changes to Australia's foreign investment review framework, activated from 10.30 pm AEST on Sunday, March 29, 2020, relating to monetary thresholds and timeframes for reviewing applications.

The market's risk-tone resides beneath the pressure with the U.S. ten-year treasury yields dropping 13 basis points (bps) to 0.68%, and Wall Street was flashing red at the end of their active session on Friday.

Looking forward, due to the lack of any significant market-moving economic releases, the traders will keep their eyes on the coronavirus headlines and further stimulus-related headlines for taking fresh direction.

AUD/USD - Technical Levels

AUD/USD - Daily Trade Sentiment

On Monday, the AUD/USD is consolidating at 0,6120, holding mostly above the horizontal resistance level of 0.6120. The AUD/USD was trading within an ascending triangle pattern, which has now been violated, and now it opens further room for buying in the Aussie until the next target level of 0.6274.

The RSI and Stochastics hold in the buying zone, supporting the bullish bias. Whereas, the improved coronavirus situation in China is also driving some bullish bias in the AUD/USD pair. The AUD/USD may find the next resistance around 0.6304 today. Let's look for buying trades over 0.6120 level today.

Try Secure Leveraged Trading with EagleFX!