Risk aversion, firmer yields underpin USD on Good Friday, gold ease, BTC remains pressured

Market bears returned to the table on Thursday as dovish ECB and mixed earnings challenged intermediate recovery moves. Also acting as downside barriers were unimpressive US data and a deadlock on the Ukraine-Russia talks, not to forget China’s covid woes. However, a lack of momentum due to the Easter Friday probed downside bias amid light calendar and off in multiple markets.

The risk-off mood renewed US Treasury yields’ north run, which in turn propelled the US dollar and triggered gold’s pullback. Crude prices, however, recovered on fears of a further supply crunch as Europe braces for a total ban on Russian energy imports. 

Cryptocurrencies couldn’t be spared as the BTCUSD and the ETHUSD dropped back towards monthly lows.

Following is the list of major assets’ latest performances:

• BRENT OIL printed a three-day uptrend before closing around $111.00 on Thursday.
• GOLD retreated from its monthly high but stays on the way to $2,000.
• The USD Index remains firmer above the 100 rate, at a fresh two-year high.
• Dow Jones, NASDAQ, and S&P 500 returned to the losses, with around 1.0% down on Thursday.
• BTCUSD struggles to defend $40,000 level, up 0.50%, but ETHUSD remains indecisive around $3,025.

No chance to optimists

Although Wednesday’s relief rally offered a ray of hope to global investors, the risk-aversion returned on Thursday, as well as remained present during the holiday-thinned trading on Friday.

The chatters that the peace talks between Russia and Ukraine as hitting a dead-end joined the European Central Bank’s (ECB) dovish comments to trigger initial weakness in the Western markets. The fear spread after big banks failed to match Q4 2021 performance during Q1 2022, despite beating market consensus on all the fronts.

Additionally, no progress in China’s covid conditions and readiness for more sanctions on Russia by the US, Europe and the UK adds to the sour mood.

All these catalysts add to the US dollar’s safe-haven demand and also propel the USDJPY while drowning EURUSD towards the fresh multi-month low. However, gold remains less affected due to its traditionally risk-safe image whereas crude prices could also ignore the firmer greenback, which generally has an inverse relationship with, as the demand-supply matrix is likely to worsen further.

BTCUSD and ETHUSD add to the weekly losses while approaching the monthly lows marked on Monday as the firmer USD and market fears drive traders away from the riskier assets like equities and cryptos.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETH/USD

⬆️ 🟢 Buy: USD Index, gold, silver, Brent oil

⬇️ 🔴 Sell: DOW JONES, S&P 500, BTC/USD, DAX, FTSE 100

A long weekend to restrict market moves

Although risk aversion can keep the US dollar on the upper hand and weigh on the riskier assets, the Good Friday holiday in multiple markets will challenge the momentum traders.

Even so, US Industrial Production may decorate the calendar while crypto headlines can offer an active session.

Traders should take care of the spikes that happen during the low-volume markets and hence a cautious approach is advisable.

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