Weekly outlook DXY: Coronavirus in Europe.
The price is falling down as a big short must do, such as we expected in the last week review, but right now the situation on Europe is getting very complicated with the Coronavirus that can change the direction for a while of the dollar index:
In the fundamental side:
The coronavirus outbreak generated a strong sell off in the market, doing pressures to the Federal Reserve for more cut rates, such as the emergency cut rate of 25 pb last week. The oil war in the middle east will obligate to the Fed to keep cutting even more the interest rate, FOR THE COMING WEEK THE PRICE CAN STILL FALLING DEEPER, BUT THERE IS A POTENTIAL REBOUNCE IN THE PRICE BECAUSE THE SITUATION ON EUROPE WITH THE CORONAVIRUS OUTBREAK, ITALY IS THE THIRD COUNTRY WITH MORE CORONAVIRUS CASES, MORE THAN 7000! And the total death is the second on the list, behind China, with a total deaths of 366 and only has been recovered 622, with a very special ratio of almost ½ between deaths and recovered. In the same line with the coronavirus outbreak in Europe, we can see France and Germany, the two most important economy on the Eurozone, surpassing the 1000 cases each one!!, so this can incentive for the euro currency for fall globally, affecting the dollar index´s fall and start a big rebounce.
ONE IMPORTANT DATA: The recovery rate of China had rise an surpass de 70% of cases, in any time the market is going to read this as a good new and start to focus more in the other location cases.
SECOND IMPORTANT DATA: On thursday there is going to be the ECB meeting, in which one Lagarde can notify the market with how they are going to give more liquidity to the market.
In the technical side:
The price last week fall in a very strong way, the price had break importance areas without any huge reaction, right now the price is in the 4.618 of the shooting star candle in the weekly chart(the signal for go short) and had touch the psychological price of 95 and rebounding in that area, the price can just keep pushing lower, but if the price does a retracement the previous fibo levels can be used as the new resistance areas.
In the fundamental side:
The coronavirus outbreak generated a strong sell off in the market, doing pressures to the Federal Reserve for more cut rates, such as the emergency cut rate of 25 pb last week. The oil war in the middle east will obligate to the Fed to keep cutting even more the interest rate, FOR THE COMING WEEK THE PRICE CAN STILL FALLING DEEPER, BUT THERE IS A POTENTIAL REBOUNCE IN THE PRICE BECAUSE THE SITUATION ON EUROPE WITH THE CORONAVIRUS OUTBREAK, ITALY IS THE THIRD COUNTRY WITH MORE CORONAVIRUS CASES, MORE THAN 7000! And the total death is the second on the list, behind China, with a total deaths of 366 and only has been recovered 622, with a very special ratio of almost ½ between deaths and recovered. In the same line with the coronavirus outbreak in Europe, we can see France and Germany, the two most important economy on the Eurozone, surpassing the 1000 cases each one!!, so this can incentive for the euro currency for fall globally, affecting the dollar index´s fall and start a big rebounce.
ONE IMPORTANT DATA: The recovery rate of China had rise an surpass de 70% of cases, in any time the market is going to read this as a good new and start to focus more in the other location cases.
SECOND IMPORTANT DATA: On thursday there is going to be the ECB meeting, in which one Lagarde can notify the market with how they are going to give more liquidity to the market.
In the technical side:
The price last week fall in a very strong way, the price had break importance areas without any huge reaction, right now the price is in the 4.618 of the shooting star candle in the weekly chart(the signal for go short) and had touch the psychological price of 95 and rebounding in that area, the price can just keep pushing lower, but if the price does a retracement the previous fibo levels can be used as the new resistance areas.
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