Dollar index slides as European countries start to reopen their economies
The US dollar declined sharply as most countries started making plans to reopen their economies. In Europe, countries like Germany, Italy, Belgium, and Spain have started to ease the previous restrictions. The same is true in Australia and New Zealand, which have started to allow businesses to reopen. The dollar weakness also came a day before the US releases the first quarter GDP data. The Fed will also conclude the meeting that will start today. The dollar declined by more than 0.5% against the Canadian dollar, 1.25% against the Swedish krone, and 0.6% against the British pound.
US futures and European stocks rose today as investors eyed the reopening of the economy and a number of important corporate earnings. Futures tied to the Dow Jones and the S&P 500 have risen by more than 1.5%. In Europe, the DAX, CAC 40, and FTSE also rose by more than 1.6%. There were many movers in these indices. In Europe, investors reacted to the positive results from UBS and negative results from Santander, BP, and HSBC. In the United States, the biggest movers were Pfizer, Pepsi, Caterpillar, and 3M.
The price of crude oil extended its previous plunge as investors continued to question the current demand and supply issue. In an earnings release, the CEO of BP talked about how ugly the energy industry was. The company’s profit declined by 67%. The biggest concern is that there is no demand for crude oil in most important markets like in the United States. As a result, most crude oil is not finding any buyers. Another catalyst for today’s move was that the biggest oil ETF has started to offload its oil holdings. The United States Oil Fund said that it would sell all its futures contracts for June delivery. These contracts are worth about $3.6 billion and represent about 3% of its total portfolio.
The EUR/USD pair rose to an intraday high of 1.0887 mostly because of the overall dollar weakness. On the hourly chart, the pair moved a few pips below the 61.8% Fibonacci Retracement level. The price is also above the 25-day and 50-day exponential moving averages while the RSI has moved above the overbought level of 70. The pair also formed the bullish three white soldiers pattern. Therefore, the bullish trend may continue as bulls attempt to test the 0.9000 level.
The AUD/USD pair continued to rally as Australia started to reopen its economy. The pair reached an intraday high of 0.6516, which is the highest it has been since March 12. The price is also above 23.6% Fibonacci retracement level on the hourly chart. It is also above the 50-day and 25-day EMA. The trend of the AUD/USD is likely to remain bullish provided the pair remains above the 23.6% retracement at 0.6400.
The XTI/USD pair declined to an intraday low of 13.10 as investors questioned the current demand and supply dynamics. The price is below the double top of 19.50, which was formed on Friday. The on-balance volume has also been falling. The bearish trend will likely continue as bears try to retest their previous low of 9.88.