Markets Trade in Panic Mode due to Concerns of Virus Spreading Outside China

Virus Concerns Result in an Equity Bloodbath, Fed Seen Cutting Twice this Year

The dollar traded lower against most of the other G10 currencies on Monday and during the Asian morning Tuesday. It lost the most ground versus JPY, SEK and EUR in that order, while it managed to eke out some gains only versus CAD. The greenback was found virtually unchanged against the AUD and GBP.

Euro Stoxx 50 — Technical Outlook

Yesterday, the global equities sold off sharply, where the Euro Stoxx 50 index was no exception. The price came close to testing its January low, at 3614, but still remained slightly above it. Given the steep slide, there might be a possibility to see a small correction higher, however, given the current negative atmosphere in the markets, the potential correction could be short-lived. This is why we will stay bearish, at least for now.

AUD/CHF — Technical Outlook

Once again, AUD/CHF is approximately near its 25-year low, at 0.6429 level, which the pair tested in the beginning of February. Given that rate is still trading below a medium-term tentative downside resistance line taken from the high of April 18 th, this gives us an indication that the overall trend is still to the downside. For now, we will stay cautiously bearish, because in order to aim for further downside, we need to see a break of the current lowest point of February, at 0.6429.

As for Today’s Events

During the European morning, we already got Germany’s final GDP for Q4, which confirmed its initial estimate, namely that Eurozone’s economic growth engine stagnated in the last three months of 2019. This also confirmed that the yoy rate dropped to +0.3% from +1.1% in Q3.

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