ridethepig | EURCNH Market Commentary 2020.03.01

1 thg 3, 2020

Here we go for a round of important chart update on the FX, Commodity and Equity board... I do not subscribe to the idea of this being the start of the euro reserve currency rally which we were tracking earlier in the year that failed from the Coronavirus short-circuit, although it is certainly moving with speed. Remember we have month end flows in play now too and to put the 🍒 on top the virus still not under control.

I am expecting further downside in euro as the outbreak continues to delay the recovery in trade for Europe, now it is crystal clear if it wasn't already that the EUR really holds the key to pandora's box for those wanting to play the reflationary trade. This has been delayed till later in 2020 via the deflationary shock from COVID-19. Tracking 1.05xx-1.04xx in EURUSD.

On the CNH side, the PBOC intervention is notable:

Advise selling rallies in Chinese Equities for now, the demand for currency will increase as long as the virus shows no signs of abating. I expect this cross to grind towards the 7.40 levels where it would be very attractive for those mid and long-term macro players to buy the dip into 2021. On the technical side, Strong resistance is found at 7.73 / 7.75, use this to sell into and target the support at 7.40 / 7.38.

Thanks as usual for keeping your support coming with likes, comments, charts and etc!