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·         EUR/USD Price Analysis: Drops below 50-day MA

EUR/USD is facing selling pressure alongside losses in the US stock futures and oil and is trading well below the 50-day average of 1.0964.

The risk has come under pressure during Monday's Asian trading hours with the Trump administration accusing China of intentionally spreading the coronavirus.

 

The pair could suffer additional losses over the next few hours, as the hourly chart relative strength index has dived out of an ascending trendline, signaling an end of the pair's bounce from the low of 1.0727.

 

EUR/USD could drop to the ascending 50-hour average support at 1.0935. Acceptance under that level would expose 1.09. The dip may be short-lived, as last week's gain confirmed a bullish reversal pattern on the weekly chart.

 

That said, a close above the 200-day average at 1.1033 is needed to put the bulls into the driver's seat.

 

·         U.S. government debt prices were higher Monday morning as Washington ramped up its criticism of China over the origin of the coronavirus pandemic.

At around 3:25 a.m. ET, the yield on the benchmark 10-year Treasury note was lower at 0.6068% and the yield on the 30-year Treasury bond was down at 1.2446%. Yields move inversely to prices.

·         According to the Japanese public broadcaster, NHK, Prime Minister (PM) Shinzo Abe is seen extending the country’s state of emergency on Monday until the end of May.

·         U.S. President Donald Trump said on Sunday he now believes as many as 100,000 Americans could die in the coronavirus pandemic, after the death toll passed his earlier estimates, but said he was confident a vaccine would be developed by the year’s end.

·         Trump administration pushing to rip global supply chains from China: officials

The Trump administration is “turbocharging” an initiative to remove global industrial supply chains from China as it weighs new tariffs to punish Beijing for its handling of the coronavirus outbreak, according to officials familiar with U.S. planning.

 

The U.S. Commerce Department, State and other agencies are looking for ways to push companies to move both sourcing and manufacturing out of China. Tax incentives and potential re-shoring subsidies are among measures being considered to spur changes, the current and former officials told Reuters.

 

Trump has said repeatedly that he could put new tariffs on top of the up to 25% tax on $370 billion in Chinese goods currently in place.

·         Secretary of State Mike Pompeo said on Sunday there was “a significant amount of evidence” that the new coronavirus emerged from a Chinese laboratory, but did not dispute U.S. intelligence agencies’ conclusion that it was not man-made.

Pompeo then briefly contradicted a statement issued last Thursday by the top U.S. spy agency that said the virus did not appear to be man-made or genetically modified. That statement undercut conspiracy theories promoted by anti-China activists and some supporters of President Donald Trump who suggest it was developed in a Chinese government biological weapons laboratory.

·         Gilead Sciences’ coronavirus fighting drug will be in the hands of doctors and patients as early as this week, the biotechnology company’s CEO said Sunday.

“We intend to get [remdesivir] to patients in the early part of this next week, beginning to work with the government which will determine which cities are most vulnerable and where the patients are that need this medicine,” Gilead Sciences chairman and CEO Daniel O’Day told CBS’ “Face of the Nation.”

 

Gilead released preliminary results from its clinical trial on its antiviral drug remdesivir last week, showing at least 50% of the COVID-19 patients treated with a five-day dosage of the drug improved. The National Institute of Allergy and Infectious Diseases then released a study that showed Covid-19 patients who took remdesivir usually recovered after 11 days, four days faster than those who didn’t take the drug.

·         Pandemic slams Asia's factories, activity hits financial crisis lows

Asia’s factory activity was ravaged in April, business surveys showed on Monday, and the outlook dimmed further as government restrictions on movement to contain the coronavirus outbreak froze global production and slashed demand.

 

A series of Purchasing Managers’ Indexes (PMIs) from IHS Markit fell deeper into contraction from March, with some diving to all-time lows and others hitting levels last seen during the 2008-2009 global financial crisis.

 

Similar gauges out of Europe due on Monday and later in the week are also expected to show industry conditions wallowing around record lows, reinforcing the International Monetary Fund’s warning the global economy is headed for its biggest decline since the 1930s.

 

The PMI for South Korea, Asia’s fourth-largest economy and a global manufacturing powerhouse, skidded to 41.6 in April, the lowest reading since January 2009. Japan’s PMI released last week similarly fell to an 11-year low.

·         Oil prices fell on Monday, paring last week’s gains, on worries a global oil glut may persist amid slumping demand and U.S.-China trade tensions that could restrict an economic recovery even as coronavirus pandemic lockdowns start to ease.

U.S. West Texas Intermediate (WTI) crude CLc1 futures fell as low as $18.10 a barrel earlier in the session and were down $1.14, or 5.8%, at $18.64 at 0506 GMT. The benchmark contract rose 17% last week.

 

Brent crude LCOc1 futures were down 24 cents, or 0.9%, at $26.20, after touching a low of $25.50. Brent rose about 23% last week following three consecutive weeks of losses.

 

·         Oil Price Forecast: WTI breaks short-term rising channel, slips further below $19

Having breached a short-term ascending trend channel from April 28, WTI futures for June drops over 5.0% to $18.72 amid the early Monday’s Asian session.

 

With the sustained break of a short-term bullish formation, the black gold currently declines towards 61.8% Fibonacci retracement of April 21 slump, around $16.45.

 

Though, the bears might have to avail a pause around 200-HMA level of $15.35 during the further downside.

 

Alternatively, a horizontal resistance line around $20.50 seems to limit the energy benchmark’s recovery moves above the channel’s support-turned-resistance line, currently around $19.90.

Should there be a clear break above $20.50, April 21 high near $22.60 will be on the buyers’ radars.