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Daily market commentary: The US dollar continues to lose ground



FOREX

The US dollar continues to lose ground against other major currencies during early Tuesday trading. Financial markets have so far largely shrugged aside heightened social tensions in the US and lingering attrition with China, continuing to ride a wave of optimistic risk-on. Hopes of a swift economic recovery in the aftermath of the current COVID-19 pandemic continue to condition investors insistent on seeing a glass half-full scenario. This is why the dollar, the go to currency during the darkest days of the great lockdown, is now devaluing against other major currencies.

Dollar Index

Ricardo Evangelista – Senior Analyst, ActivTrades

OIL 

The positive sentiment that has dominated markets in the last few weeks has driven the recovery of the oil price. The progressive end of lockdown in most countries is clearly seen as a bullish element for the barrel. Moreover, investors are betting that the outcome of the imminent meeting of OPEC+ will be an extension of the current restrictions, probably for two or three months, although Saudi Arabia will have to overcome Russian resilience to this extension.

Technically the WTI price is challenging the resistance level at $36. A clear break-up would open space for further recoveries as the price could try to fill the gap down registered on the 9th of March, when OPEC+ temporarily failed to achieve a deal and price collapsed by more than 20% in a single day.

oil chart

Carlo Alberto De Casa – Chief analyst, ActivTrades

daily market analysis

EUROPEAN SHARES 

Most European stocks edged higher on Tuesday despite a mixed tone registered overnight by Asian benchmarks as investors still struggle to assess the potential impact of US civil unrest to markets. While recent reassuring macro data and optimism about the reopening of economies in both Europe and the US have sustained the bullish pressure so far, investors are becoming increasingly worried about the situation in the US. Even if traders still don’t expect the current US civil unrest to last for long, these social and political events could seriously impact reopening and social distancing measures, raising fears of a second virus wave which would be disastrous to businesses and the economy as a whole. In addition to the virus threat, many think the current situation and the way President Trump is handling the issue could put his chances of a re-election in November at risk, making the short to mid-term outlook more uncertain.

All of the EU benchmarks are trading higher with the DAX-30 Index registering the best performance so far on the old continent. The price continues to rally following a pull-back move above 11,830pts earlier this morning. The bullish trend remains valid and the next targets are above 12,000pts and 12,145pts. However, the bearish divergence registered between prices and the MACD indicator may indicate a trend slow-down on a very short-term basis.

DAX-30 Index

Pierre Veyret– Technical analyst, ActivTrades

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Daily market commentary: The US dollar continues to lose ground

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