GBP/USD Slumps As Brexit Back In Focus & On Stronger Dollar

Sterling was out of favour on Wednesday because the focus turned back to Brexit and therefore the UK’s future relationship with the EU. European Commission President Ursula von der Leyen marked out her red lines, warning the united kingdom to stay closely to EU rules if it wanted to reach a far-reaching trade affect the EU.

A level playing field is what the EU are trying to find . Time will tell whether it's what Boris Johnson is ready to supply . The pound remains struggling as traders doubt whether 1 year are going to be sufficient tine to agree a deal.

Dollar Advances After Strong ADP Data
The US dollar was on the front foot at the beginning of Wednesday boosted by flows into shelter assets. Yet whilst US – Iran tensions eased, and risk sentiment picked up the dollar remained firm thanks partially to strong ADP data.
ADP private payroll report added a whopping 220,000 jobs in December, this was well before expectations of 160,000 jobs and November’s 67,000 jobs created. Despite the impressive data, the dollar is paring gains, as flows towards riskier assets devour .

Up Next
The British Parliament is predicted to vote through the Brexit Withdrawal Bill tomorrow. No hold ups are expected. As tension continues t ease within the Middle East US dollar investors could turn their attention towards Friday’s NFP.

Levels to observe
Cable is lacking bullish momentum on 4 hrs chart, below the $1.32 handle and below the 50 sma. GBP/USD is testing support at $1.31. A breakthrough here could see the worth test $1.3055 opening the door to $1.30. an opportunity above $1.3212 could bring a more bullish outlook.

 EUR/USD To Test Yearly Low?

EUR/USD has dropped through $1.1 its lowest level since late February amid a rush for the shelter dollar. 

German ZEW sentiment data caused an already panicked market to worry some more. The ZEW index, which gauged financial analyst’s sentiment and consider on an economic situation dived in March, recording the steepest drop on record.

The ZEW index fell to -49.5 in March from +8.7 in February and is now at its lowest level since December 2011. 

German recession
Germany is heading for a recession. things is fast paced . However yesterday Chancellor Angela Merkel announced a general lock down of Europe’s largest economy. All shops are to be closed, no touristic travel domestically or abroad, restaurants open until 6pm and no sports or cultural events allowed. So, consumption will drop dramatically. Large car manufacturers have also announced a short lived halt to production. the availability shock demand shock are going to be crippling and therefore the economic impact are going to be staggering. 
And the problem isn't just Germany, Italy, Spain and France, the most important economies within the eurozone all face severe pressure from the coronavirus outbreak, as governments lock down countries with already very fragile economies.

US retail sales miss
Meanwhile US data is additionally disappointing. Retail sales declined a -0.5% in February, missing expectations of 0.2% increase. These figures show that consumption, the most driver of the US economy had began to slow even before coronavirus social distancing measures were enforced, raising fears that the info out of the approaching months are going to be hideous.

Offshore Dollar Market Stress 
Despite the Fed’s best efforts to ease pressures within the money markets recent signals suggest that the moves haven’t worked. this is often presumably a results of lenders hoarding the dollar in expectation of increased liquidity needs from companies and growing concerns over bad loans. The pressure was most explicit within the euro/dollar 3-month FX spread which widened to 124 bps at one point, its widest level since the ecu debt crisis and up from just 20 bps earlier this month. this suggests that market player are willing to pay higher premiums for dollars, an amber alarm flashing.

EUR/USD hit a 14 month high on 9th March. Since then a correction has been is play which could see the pair retest the year low. Global turbulence within the financial markets and fears of a recession are seeing traders hunt down safe havens like the dollar and therefore the yen. 
Levels to observe 
EUR/USD is down over 1.5% at $1.10, it's picked up off session lows of US$1.0974. It trades below its 50, 100 and 200 sma and comfortably below the descending trendline.
Immediate support are often seen at $1.0974 (today’s low) before $1.0953 (low 28th Feb) and $1.0880 (low 26th Feb).
Resistance are often seen at $1.1026 (200 sma), $1.1118 (today’s high) and $1.1130 (100 sma). we might be trying to find a move above $1.1170 to negate on the present bearish trend on 4 hour chart.