High demand for cash and the status of the main reserve currency made the US dollar the king of the second decade of March. Over the past couple of weeks, it has strengthened against the E=euro by 7.5%, knocked out the British pound, Norwegian krone, Australian and Canadian dollars, as well as many monetary units of developing countries, and took the status of the main safe-haven currency from the Japanese yen and Swiss franc. The victory March of the "American" could not remain unnoticed by the White House. On Forex, rumors are actively circulating about the intervention of the G-7 countries in the life of the currency market.

At first glance, the strengthening of the dollar in response to the Fed's aggressive reduction of the federal funds rate and the resuscitation of QE looks illogical. However, the fall in borrowing costs in the United States to almost zero allowed the "American" to take away the status of the main funding currency from the euro and yen, which, in the conditions of a sharp rise in volatility on Forex, is a strong argument in favor of selling EUR/USD and buying USD/JPY.

Dynamics of volatility in Forex

The second important driver of the USD index rally was high demand for the dollar inside and outside the United States. Americans went into the cache in order to maintain their own positions in the stock market, other countries needed a currency issued in the States for international payments and debt payments. This is not at all surprising, given the fact that about 40% of the total payment turnover in world trade is associated with the US dollar. And about 50% of the total volume of cross-border loans. The liquidity crisis may be followed by a payment crisis, so the Fed decided to enter into currency swaps with 14 central banks around the world.

Despite the fact that the coronavirus can lead to the end of the longest economic expansion in the United States in history, the situation in Italy, Spain, France and Germany looks significantly worse. European business activity in March may collapse to a multi-year bottom, and no one doubts the eurozone recession. At the same time, the unfortunate phrase of Christine Lagarde at a press conference following the meeting of the Governing Council on March 12 that the ECB should not deal with narrowing spreads in the currency bloc's debt market revived the idea of its collapse and harm the "bulls" for EUR/USD. The mistake cost the Frenchwoman dearly – only a massive expansion of QE by €750 billion managed to calm the old world bond markets.

Yield dynamics of European bonds

What's next? On Forex, rumors about currency interventions by the United States and allies along the lines of 2011 are amplified, when they actively bought USD/JPY against the backdrop of the strengthening of the yen as a safe haven currency due to natural disasters in Japan. The question is, from what levels will the euro begin to acquire. BofA Merrill Lynch estimates that from 1.05.

Technically, the "Expanding Wedge" pattern is formed on the daily EUR/USD chart. The rebound from the 23.6%, 38.2% and 50% Fibonacci resistances from the 4-5 wave should be used for sales. On the other hand, an update to the March low will increase the risks of the pair continuing its southern hike to 1.05, where important pivot levels are located.

EUR/USD, the daily chart