The United States dollar (USD) is continuing to posture as a premier COVID-19 safe-haven. Intrasession gains vs the British pound, Swiss franc and Euro have highlighted the trading day for the Greenback. In the case of the EUR/USD, rates are quickly approaching yearly lows.

As we get into the April trading month, it will be interesting to observe how the currency, equity, and commodity markets attempt to realign. Equities and commodities are severely depressed, a byproduct of the USD’s new safe-haven status. So when is the dynamic due to shift back to risk-on? From my view, it will be when the following events come to pass:

• COVID-19: Today’s reports suggest that the COVID-19 pandemic remains in full swing. Experts estimate 102,000 confirmed cases and 2,935 deaths worldwide. In the past 24 hours, there have been 562 fatalities, the largest such figure to date. It’s an obvious point, but these numbers will have to come down before anyone is interested in assuming risk.
• Financial System Stability: The past several weeks have brought pledges of economic stimulus and unlimited debt market liquidity. However, most of these funds have yet to hit the markets. Be on the lookout for the capital injections to be felt over the next 14 days and boost the severely-muted risk appetite.
• The Oil Question: The global oil markets have experienced nearly unprecedented devastation since mid-February. Production cuts or government pledges to subsidize producers will be needed to boost overall market sentiment.

So, how will things pan out? Look at it this way ― if risk isn’t back in style by the third week of April, the current market dynamic will likely extend into June. Let’s take a look at the daily technicals for the EUR/USD and see if there’s a counter-trend trade to be had.

EUR/USD Runs At Yearly Lows

Rates are back below daily support and the EUR/USD is trending south. If the current selling is sustained, a long trade may set up for the near future.

As we turn our attention toward next week, here are two levels worth watching in this market:

• Support(1): 78% Current Wave Retracement, 1.0748
• Support(2): 2020 Low, 1.0636

Bottom Line: At this point, it’s difficult to bet against the Greenback. However, if we see the EUR/USD continue to fall, a buying opportunity may set up. Until elected, I will have buy orders in the queue from 1.0751. With an initial stop loss at 1.0724, this trade produces 25 pips on a slightly sub-1:1 risk vs reward management plan.