On Wednesday, the U.S. stocks saw a 3% selloff for a second consecutive session after authorities warned of a coronavirus outbreak on American soil. The Dow Jones Industrial Average plunged 879 points (-3.2%) to 27081, the S&P 500 shed 97 points (-3.0%) to 3128, and the Nasdaq 100 lost 244 points (-2.7%) to 8834. The S&P 500 has returned to levels below all 20-day, 50-day, and 100-day moving averages.

The U.S. Centers for Disease Control (CDC) warned the public that the coronavirus outbreak on American soil is inevitable, saying that Americans should begin planning for a "significant disruption" in their daily lives. There are now 53 confirmed coronavirus cases in the U.S. Regarding U.S. economic data, the CB Consumer Confidence Index surged to 130.7 in February (132.2 expected).

 

XAU/USD - Profit Taking in Gold Triggers Selloff

Spot gold retreated 1.5% to $1,634 an ounce, as a 5% (78 dollars) rally in the prior five sessions lured investors into taking profits. The safe-haven-metal prices dropped for the 1st time in 11 sessions, halting its 10-days rally after found the stability in the market risk-sentiment.

Spot gold, which tracks live trades in bullion, was down $9.99, or 0.6%, at $1,650.43. Bullion struck $1,689 in the previous session, its highest since January 2013.

Stocks dropped because the U.S. Centers for Disease Control and Prevention said a spread of Covid-19 in the U.S. was sure and warned Americans to be ready for interruptions in their daily lives.

The fast-spreading coronavirus outside China, with new cases being reported in the U.S., Singapore, Germany, and several other European countries, investors are still careful due to looming risks to the global economic growth.

Recently, a broad-based U.S. dollar weakened due to a drop in the U.S. Treasury yields. While the Wall Street indices also supported gold to regain some footing. Despite the virus fears, gold extended its correction from a seven-year peak of $1689.40 and reached as low as 1625, as markets resorted to profit-taking after Monday's dramatic rise.

Looking forward, there won't be any meaningful macroeconomic data releases on Wednesday, and markets will remain focused on coronavirus headlines.

XAUUSD

 

XAU/USD - Daily Technical Levels

Support

Pivot Point

Resistance

1643.69

1666.54

 

1682.16

1628.07

1705.01

1589.6

1743.48

 

XAU/USD - Daily Trade Sentiment

The precious metal gold has traded selling mode to fill the huge gap and has nearly completed 50% Fibonacci retracement at 1,626 on the daily graph. As of now, the yellow metal gold has traded as we forecasted in our February 25 U.S. report.

Bearish break out of the 1,626 mark can send gold prices towards 61.8% Fibo levels 1,604 in the following days. On the shorter timeframe, gold is trading in the oversold zone, and it may give us a slight bullish correction unto 1,653 before presenting more selling.

 

USD/CAD - Triple Bottom Support Plays

The USD/CAD slipped 0.1% to 1.3283. The Canadian dollar climbed versus the U.S. dollar as the USD/CAD clawing back some of the previous day's declines ahead of a talk by a Bank of Canada executive, which could give hints on the bank's speculation about the economic influence of the coronavirus break.

The Bank of Canada Deputy Governor Timothy Lane is expected to deliver a speech on money and payments in the digital era. On Wednesday, the odds of an interest rate cut in the coming week has risen to about 30% from 10% in the wake of coronavirus spread outside of China. In addition to this, the Canadian government bond yields trimmed higher over the yield curve, with the 10-year yield climbing 1.5 basis points to 1.215%.

Oil prices stayed under pressure, as the coronavirus' global spreading is expected to dampen oil demand. U.S. Nymex crude oil futures fell a further 3.0% to $49.90 a barrel, and Brent was down 2.4% to $54.95 a barrel. Consequently, the USD/CAD is gaining bullish momentum.

USDCAD

 

USD/CAD- Daily Technical Levels

Support

Pivot Point

Resistance

1.3261

1.3285

 

1.3317

1.3229

1.334

1.3174

1.3395

 

USD/CAD- Daily Trade Sentiment

The USD/CAD is consolidating in a tight trading range of 1.3270 - 1.3300. Violation of this range has the potential to drive a further trend in the USD/CAD pair. The USD/CAD is gaining strong support around 1.3270 area, and closing of candles above this level can lead USD/CAD prices towards the next resistance mark of 1.3325.

Taking a look at the 4-hour timeframe, the USD/CAD is also gaining support around 1.3270, which is ended by 50 EMA. The RSI and Stochastics are lingering in the neutral zone, as investors seem to wait for a solid reason to determine further movement in the USD/CAD.

 

AUD/USD – Bearish Channel Intact

The AUD/USD currency pair continues to trading bearish and hit the fresh 11-years low, near the 0.6570 regions in the last hour, mainly due to the on-going coronavirus fears. The AUD/USD is trading at 0.6577 and consolidates in the range between the 0.6570 - 0.6607.

The AUD/USD pair came under some selling pressure during the Asian session on Wednesday due to uncertainty over the coronavirus outbreak. Increasing market concerns about the outbreak of the deadly coronavirus and its impact on the Chinese economy is the key factor that kept exerting pressure on the China-proxy Australian Dollar.

Despite the modest recovery in the global risk sentiment, the buyers still unimpressed. The recovery in risk-tone usually tends to benefit perceived riskier currencies – like the Aussie.

The signs of stability in the global financial markets provided support to the U.S. Treasury bond yields, which eventually helped the USD to stop its recent corrective slide.

Looking forward, due to the lack of significant market-moving economic data scheduled to release on Wednesday, traders will keep their eyes on any fresh developments about the coronavirus for producing some meaningful trading opportunities.

AUDUSD

 

AUD/USD - Technical Levels

Support

Pivot Point

Resistance

0.6596

0.6617

 

0.6649

0.6564

0.667

0.6511

0.6723

 

AUD/USD - Daily Trade Sentiment

The AUD/USD is finally breaking below the horizontal double bottom support level of 0.6589. With a close of bearish candle below this level, the odds of selling trend continuation rises. On the lower side, the AUD/USD pair may head towards the next support area of 0.6530.

Both the RSI and 50 periods EMA are heading lower towards, suggesting further chances of a bearish trend in the AUD/USD. On the higher side, the immediate resistance can be seen around 0.6590 and 0.6620. Let's consider taking sell trades below 0.6590 to target 0.6530.

 


 

Try Secure Leveraged Trading with EagleFX!

Risk Warning: CFD and Spot Forex trading both come with a high degree of risk. You must be prepared to sustain a total loss of any funds deposited with us, as well as any additional losses, charges, or other costs we incur in recovering any payment from you. Given the possibility of losing more than your entire investment, speculation in certain investments should only be conducted with risk capital funds that if lost will not significantly affect your personal or institution’s financial well-being. Before deciding to trade the products offered by us, you should carefully consider your objectives, financial situation, needs and level of experience. You should also be aware of all the risks associated with trading on margin.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex Analysis

Editors’ Picks

EUR/USD pressured as EZ ministers fail to reach a deal

EUR/USD is trading around 1.0850, down on the day. Eurozone finance ministers failed to reach a deal on a joint response to the coronavirus crisis. Disease-related headlines are eyed.

EUR/USD News

GBP/USD is hovering around 1.23 as updates on the PM are awaited

GBP/USD is trading around 1.23, stable. Updates on PM Johnson's condition are eyed amid fears of a partial power vacuum. Updates related to the disease are eyed.

GBP/USD News

Forex Today: Dollar bounces as coronavirus keeps spreading, Johnson still in ICU, Fed minutes eyed

The market mood is mixed after US stock gains vanished late on Tuesday. The slide allowed the dollar to recover, and it is rising across the board early on Wednesday. Coronavirus has already infected more than 1.4 million and taken the lives of over 82,000 people. 

Read more

WTI pierces $25 amid mixed clues, EIA data eyed

WTI holds onto recovery gains. The US catalysts seem to drive energy prices more than from the Middle East. API data escalated the inventory build, EIA might follow the footprints. Coronavirus crisis weighs on the market sentiment. 

Oil News

Gold regains $1,650 amid cautious trade sentiment

Gold defies the pullback from the monthly top. While Monday’s coronavirus (COVID-19) data suggested receding fears of the deadly disease, the latest figures keep the risk-off alive. The US FOMC minutes will decorate the economic calendar.

Gold News

Forex Majors

Cryptocurrencies

Signatures