Coronavirus outbreak spooks global financial markets

Market fears

Investors moved into safe-haven asset classes this week as fears over the spread of the coronavirus in China continued to grow. Global equity markets opened the week sharply lower, with traders and investors moving into the safety of bonds, the Japanese yen currency, and gold. Concerns about the health of the Chinese economy also worsened this week, as government officials in China quarantined the city of Wuhan, which is the suspected area where the coronavirus outbreak started. The reopening of the Chinese stock market was also delayed over fears about the spread of the virus, as China’s new year celebration came to an end.

• The USDJPY pair is only bullish while trading above the 109.30 level, key resistance is found at the 110.20 and 111.00 levels.
• If the USDJPY pair trades below the 109.30 level, key support is located at the 108.40 and 107.50 levels.

Bitcoin $10,000

Bitcoin eyed the $10,000 level this week as the broader cryptocurrency market marched higher as the strong start 2020 continued to gather pace. Bitcoin closed the day above its 200-day moving average for the first time this year as the number one cryptocurrency officially turned technically bullish. Improved sentiment towards cryptocurrencies and increasing demand amongst crypto users in the emerging markets all contributed to the rise in digital currencies this week. Ethereum and Litecoin also moved higher but failed to match the strong gains seen in the BTCUSD pair this month.

• The BTCUSD pair is only bullish while trading above the $8,900 level, key resistance is found at the $9,800 and $10,000 levels.
• The BTCUSD pair is only bearish while trading below the $8,900 level, key support is located at the $8,700 and $8,500 levels.

Dovish twist

The Federal Reserve kept interest rates unchanged this week as widely expected, and offered a fairly dovish policy statement to traders and investors. The Federal Open Market Committee policy statement communicated to market participants that while the employment situation inside the US economy remained strong, inflation in the US continued to remain muted. The initial market reaction saw the greenback moving marginally lower, although the move was quickly reversed, with the greenback firming against the euro, British pound, emerging market, and antipodean currencies.

• The USDCHF pair is only bearish while trading below the 0.9730 level, key support is found at the 0.9650 and 0.9540 levels.
• If the USDCHF pair trades above the 0.9730 level, buyers may test towards the 0.9770 and 0.9840 resistance levels.

Sterling spikes

The British pound rallied against the US dollar this week as Bank of England policymakers decided not to cut interest rates as some analysts had been expecting. The GBPUSD pair spiked higher as the voting amongst the central bank showed that most members of the central bank were in favor of keeping interest rates unchanged. The policy statement was largely dovish and continued to underscore the risks that the UK economy is facing over the coming months. Sterling bulls looked to close the month of January above the key 1.3100 level.

• The GBPUSD pair is only bearish while trading below the 1.3100 level, key support is found at the 1.3000 and 1.2960 levels.
• If the GBPUSD pair trades above the 1.3100 level, buyers may test towards the 1.3200 and 1.3370 resistance levels.