USD/RON
Here's my take on USD/RON evolution:
Looking at USD/RON chart the following may be taken into account, from a technical perspective:
* USD has been on an ascending channel (highlighted in gray) vs RON starting Apr'18;
* the 50 day Moving Average (MA) highlighted in dark green has been acting as support since then - 4.5 range;
* the 200 day MA (light green) is huge support - it has never been pierced (currently sitting at around 4.3);
* The graph printed out a huge bull pole (the red ellipse) right when COVID pandemic hit US's stock-market. USD got highly appreciated then, as investors liquidated their positions on the stock market and found refuge in the all-mighty USD. The bull pole maxed out at 4.56 and began printing out the rest of the flag since then, around the 50 MA (4.5);
* The purple channel below the graph - the Relative Strength Index doesn't show we're in the overbought or oversold side - it's bang in the middle;
All technicals indicate to a strong buy for USD. AB-CD Fibonnaci analysis point out to the next target around 4.68 to be hit by the end of July'20.
Stepping back from the technical perspective and seeing the bigger picture in correlation with the graph, we've got the following:
* Shelter at home, lock-downs are still in place and may well be up to the end of June'20. This means that the helicopter money US gave out are harder to reach the markets. US should be safe for the next 2 months now from inflation. Personally I'm not a fan of the optimist stagflation scenario. It's not that i don't want it, but I find it really hard to be put into play - it means changing american's mindset from a behavioral economic stance or implying social restrictions (spending caps) - that defies all american's freedom concept and land of possibilities. When US is going to be hit by inflation - shit's gonna hit the fan. I fear for Romania if/when that's going to happen.
* I think US's Q2 fillings scheduled for mid July are going to bring up the same kind of reaction the market had in March, refusing the DowJone's and S&P 500's recovery and confirming it as a dead cat bounce, further strengthening USD's position.
* Romania's Central Bank has less and less reserves to defend the RON against external pressure. Efforts are made, and attention is distributed in supporting the domestic economy;
* Romania's Central bank rate was reduced from 2.5 to 2% on the 23rd of March. Romania's 10Y GOV Bond Yield is about 4.4% (0.4%/year). It's more attractive than what US is offering but why invest in Romania to begin with?;
* Standard and Poor's marks Romania as a "BBB-" class country (from a scale of 1 to 18, BBB- is on the 10th position). We're a position away from the "Non Investment Grade Speculative" class.
Having these in mind, I'm not offering an investment advice, but based on the above I'm seeing it as a strong buy on USD.
Looking at USD/RON chart the following may be taken into account, from a technical perspective:
* USD has been on an ascending channel (highlighted in gray) vs RON starting Apr'18;
* the 50 day Moving Average (MA) highlighted in dark green has been acting as support since then - 4.5 range;
* the 200 day MA (light green) is huge support - it has never been pierced (currently sitting at around 4.3);
* The graph printed out a huge bull pole (the red ellipse) right when COVID pandemic hit US's stock-market. USD got highly appreciated then, as investors liquidated their positions on the stock market and found refuge in the all-mighty USD. The bull pole maxed out at 4.56 and began printing out the rest of the flag since then, around the 50 MA (4.5);
* The purple channel below the graph - the Relative Strength Index doesn't show we're in the overbought or oversold side - it's bang in the middle;
All technicals indicate to a strong buy for USD. AB-CD Fibonnaci analysis point out to the next target around 4.68 to be hit by the end of July'20.
Stepping back from the technical perspective and seeing the bigger picture in correlation with the graph, we've got the following:
* Shelter at home, lock-downs are still in place and may well be up to the end of June'20. This means that the helicopter money US gave out are harder to reach the markets. US should be safe for the next 2 months now from inflation. Personally I'm not a fan of the optimist stagflation scenario. It's not that i don't want it, but I find it really hard to be put into play - it means changing american's mindset from a behavioral economic stance or implying social restrictions (spending caps) - that defies all american's freedom concept and land of possibilities. When US is going to be hit by inflation - shit's gonna hit the fan. I fear for Romania if/when that's going to happen.
* I think US's Q2 fillings scheduled for mid July are going to bring up the same kind of reaction the market had in March, refusing the DowJone's and S&P 500's recovery and confirming it as a dead cat bounce, further strengthening USD's position.
* Romania's Central Bank has less and less reserves to defend the RON against external pressure. Efforts are made, and attention is distributed in supporting the domestic economy;
* Romania's Central bank rate was reduced from 2.5 to 2% on the 23rd of March. Romania's 10Y GOV Bond Yield is about 4.4% (0.4%/year). It's more attractive than what US is offering but why invest in Romania to begin with?;
* Standard and Poor's marks Romania as a "BBB-" class country (from a scale of 1 to 18, BBB- is on the 10th position). We're a position away from the "Non Investment Grade Speculative" class.
Having these in mind, I'm not offering an investment advice, but based on the above I'm seeing it as a strong buy on USD.
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