Fears over new lockdown measures send risk assets sharply lower
Global equity markets came under heavy selling pressure this week, as Germany and France announced new lockdown measures due to a worrying rise in new COVID-19 infections. European equity markets took the brunt of the selling, as investors feared the new lockdown measures could severely harm the entire European economy. The S&P 500 and Dow Jones Industrial Average also tumbled sharply, as traders feared that the United States may follow, and start to announce state-wide lockdowns across America. Investors shunned risker asset classes and moved back into the safety of the US dollar and US Treasuries, and continued to sell precious metals such as gold and silver.
- The S&P 500 is only bullish while trading above the 3,380 level, key resistance is found at the 3,430 and 3,500 levels.
- The S&P 500 is only bearish while trading below the 3,380 level, key support is located at the 3,000 and 2,700 levels.
Bitcoin hit a new 2020 trading high this week, as the number one cryptocurrency advanced towards the $13,860 resistance level. The buying frenzy in Bitcoin started at the beginning of the trading week after the BTCUSD pair performed its highest weekly price close since January 2018. Bitcoin was also boosted by positive news, after Singapore’s largest commercial bank, DBS, announced that it was launching a cryptocurrency exchange for digital assets. Bitcoin gave back a small portion of its weekly gains due to severe risk-off trading sentiment, as the cryptocurrency market started to turn lower alongside global equity markets.
- The BTCUSD pair is only bearish while trading below the $11,800 level, key support is found at the $11,500 and $10,800 levels.
- The BTCUSD pair is only bullish while trading above the $11,800 level, buyers may test towards the $13,900 and $15,000 resistance levels.
The euro currency fell against a basket of currencies this week after the European Central Bank promised to “recalibrate rates” at the December ECB policy meeting. European Central Bank President, Christine Lagarde, also said the European recovery was starting to lose momentum as COVID-19 infection and restrictions hamper the already weak economic recovery. The single currency had been under selling pressure against the US dollar prior to the European Central Bank policy decision, as traders and investors reacted to the French and German governments announcing new lockdown measures earlier in the week.
- The EURUSD pair is only bearish while trading below the 1.1800 level, key support is found at the 1.1600 and 1.1500 levels.
- The EURUSD pair is only bullish while trading above the 1.1800 level, buyers may test towards the 1.1850 and 1.1940 resistance levels.
Brexit optimism continued to support the British pound currency above the 1.3000 level against the US dollar this week, as United Kingdom negotiators headed to Brusells for emergency talks. Traders and investors hoped that a deal could be struck before the end of the month, as the deadline continued to close ahead of the United Kingdom’s departure from the EU next year. Analysts speculated that British PM Boris Johnson may be stalling negotiations so he could await the outcome of the US elections. The FTSE 100 turned sharply lower this week, as data showed that UK car sales had fallen to a twenty-five year low.
- The GBPUSD pair is only bearish while trading below the 1.2900 level, key support is found at the 1.2800 and 1.2660 levels.
- If the GBPUSD pair trades above the 1.2900 level, buyers may test towards the 1.3060 and 1.3180 resistance levels.