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Daily Market Report
21 Oct 2019

EURUSD

The EUR/USD pair has rallied Friday to close with gains for a third consecutive week at 1.1169. There was no particular catalyst for EUR gains, but persistent dollar’s weakness and a buoyant Pound underpinned by hopes that the UK Parliament would prevent a hard-Brexit by month-end over the weekend, as it finally happened.

The shared currency has enjoyed a substantial demand ever since it fell to a two-year low of 1.0878 early this month. The continuation of such a positive momentum is depending on how the market reacts to weekend headlines coming from the UK, as UK PM Johnson was finally forced by the Parliament to ask for an extension to prevent the kingdom from crashing out from the Union without a deal. Speculative interest could read it as positive, pushing the Sterling higher, which will, by defect, help the EUR to retain its gains.

On the data front, there’s little to care about this Monday, as the only figure coming from the EU will be the German’s September Producer Prices Index. The ECB is having a monetary policy meeting later in the week, but given that it will be the last one preside by Mario Draghi, it seems unlikely that he would make a relevant announcement.

The daily chart shows that the EUR/USD pair has finished the day above its 100 DMA for the first time since mid-July, while the 20 DMA has turned north below the current level. The 200 DMA maintains its bearish slope, providing dynamic resistance at around 1.1210. Technical indicators in the daily chart offer solid bullish slopes within overbought readings, all of which skew the risk to the upside. In the shorter term, and according to the 4-hour chart, the pair is bullish, as despite being in extreme overbought levels, technical indicators keep heading north, as the pair develops far above all of its moving averages.

Support levels: 1.1145 1.1100 1.1065  

Resistance levels: 1.1180 1.1210 1.1250

USDJPY

The USD/JPY pair closed the week at around 108.40, down of Friday for a third consecutive day as the American currency remained under selling pressure. Brexit hopes kept high-yielding currencies strengthening, in detriment of the greenback, this last also undermined by dismal US data. USD/JPY decline was limited by US Treasury yields, which held on to the higher end of their weekly range, and despite the sour tone of Wall Street. US equities were down amid disappointing earnings reports.

During the weekend, Bank of Japan Governor Kuroda hit the wires and said the BOJ would  “certainly” reduce short- to medium-term interest rates if it needed to ease monetary policy, in line with the market’s expectation that the central bank will sooner than later add to its massive stimulus program. Early Monday, the country will release September Trade Balance. The market’s forecast points to an adjusted deficit of ¥-229.7B. Imports are seen down 2.8%, while exports are expected to have fallen by 4.0%.

The USD/JPY pair has settled a few pips above the 23.6% retracement of its latest daily advance, which limits the chances of a bearish extension. Brexit noise could trigger a run to safety, in which case, the market will be looking at the price´s behavior around the 38.2% retracement of the same rally at 108.00. Meanwhile, the daily chart shows that the pair was unable to surpass its 200 DMA, but it holds above the shorter ones. Technical indicators have eased, retaining their bearish slopes within positive levels. In the 4-hour chart, readings favor a downward extension, as the pair has settled below a now flat 20 SMA, while technical indicators head south within negative levels.

Support levels: 108.00 107.70 107.30

Resistance levels: 108.65 109.00 109.35

GBPUSD

Hopes that the UK will avoid a hard-Brexit kept the Pound rallying against all of its major rivals by the end of last week, with GBP/USD finishing it a handful of pips below the critical 1.3000 level. The UK Parliament has met Saturday and voted in favor of a Letwin amendment, ahead of the Meaningful Vote on PM Johnson’s latest agreement with the EU. The amendment forced Johnson to write a letter to the EU and ask for a Brexit delay, which he finally did late Saturday. The Prime Minister still attempts to leave the Union by the end of October or shortly after.

On Sunday, Donald Tusk, the President of the European Council, tweeted: “The extension request has just arrived. I will now start consulting EU leaders on how to react.”  The market needs now to know whether the EU will grant the delay, and what and how the UK Parliament will vote next. The news, which were initially perceived as negative, could, on the contrary, lift Sterling on relief. At the same time, a Meaningful Vote is likely in the next few days. The Parliament is set to meet this Monday, although it’s unclear whether they will discuss the Brexit bill.

The GBP/USD pair has settled at levels last seen in May this year, and offers a firmly bullish stance in its daily chart, as it surpassed all of its moving averages for the first time in five months. Also, technical indicators in the mentioned chart maintain their bullish slopes, despite being in extreme overbought territory. Shorter-term, and according to the 4-hour chart, an upside extension is also favored, as a bullish 20 SMA leads the way north by providing intraday dynamic support, currently at 1.2830. The Momentum indicator has eased within positive levels, but the RSI resumed its advance within overbought levels.

Support levels: 1.2930 1.2880 1.2825

Resistance levels: 1.2995 1.3030 1.3085

AUDUSD

The Australian dollar advanced against the greenback to close the week at 0.6855, its highest in over a month, despite data from the country released throughout the week failed to impress. The advance was backed by broad dollar’s weakness and hopes the UK would avoid a hard-landing. In the data front, a light of hope came from a decline in the country’s unemployment rate, although reading within lines, the situation in the sector is still far from optimal. The Reserve Bank of Australia has left the door open for additional cuts, and the latest employment data was not enough to change such a stance. There are no data scheduled in Australia this Monday, while China will release housing figures.

The AUD/USD pair is bullish according to the daily chart, trading just a few pips below a bearish 100 DMA, an immediate resistance at 0.6880, and well above the 20 DMA, which gains upward traction. Technical indicators in the mentioned chart maintain their upward slopes well into positive territory. In the 4-hour chart, chances are of further gains ahead, as the pair has advanced above all of its moving averages, with the 20 SMA now crossing above the 200 SMA, and as technical indicators continue advancing well into overbought territory.  

Support levels: 0.6820 0.6795 0.6770

Resistance levels: 0.6860  0.6900 0.9630

GOLD

Spot Gold ended down by -1.98% and was travelling from a high of $1,493.51 to a low of $1.484.96. Gold for December delivery on Comex lost $4.20, or 0.3%, to settle at $1,494.10 an ounce. Technically, momentum is lowe in the precious metals and Gold bulls struggle at the 21-DMA, thus, a bearish follow-through could be on the cards for next week.

Bears have eyes on a 50% mean reversion of the late June swing lows to recent highs level around 1460/70 initially. On the other hand, bulls are just a break away of the 50-DMA and from a close through the psychological 1500 level ahead of the 1520 area and the1535 resistance target. 

Support levels: 1469 1450 1426 

Resistance levels: 1494 1513 1536

 

SILVER

Silver prices on a spot basis were ending pretty much flat, travelling from a high of $17.60 to a low of $17.41, closing at $17.55. Futures dropped 3.4 cents, or 0.2%, to end at $17.578 an ounce, for a weekly rise of 0.2%. 

The price is in consolidation on the 17 handle. Bulls fear a re-run to the downside at this juncture with repeated failures at the 21-DMA. The trend-line support will remain a focal point ahead of the  61.8% Fibonacci level down at 16.10, guarding the 200-day moving average which is resting in the 15.99s.

Support levels: 17.47 17.22 16.91

Resistance levels: 17.78 18.03 18.34

 

CRUDE WTI

West Texas Intermediate crude finished -0.7% lower, losing the $54.60 handle to score a low of $53.34.  Data was showing slower Chinese economic growth which created more worries about weaker demand for oil. WTI futures fell by 15 cents, or 0.3%, to settle at $53.78 a barrel on the New York Mercantile Exchange, posting a 1.7% weekly decline.

The GMMAs remain bearish and WTI remains below the 50 and 21-day moving averages, with bulls losing sight of the 57 handle around the 200 DMA. Bears will seek a break below the 50 handle which will bring the prospects of a run down to the Nov 2018 lows at 49.39 again. the 46.90 level ahead of the 18th Dec lows down at 45.77 will then be in focus. 

Support: 52.48 50.14 48.97

Resistance 55.99 57.34 59.41


DOW JONES

The DJIA ended lower by 255 points, or 0.9%, at 26,770 with Boeing shedding about 70 points from the price-weighted average. The S&P 500 index ended 0.4% lower at 2,986, while the Nasdaq Composite Index finished 0.8% lower at 8,090.

The DJIA plunged below the 27000s and closed below the trendline support which was guarding a run to the 200-day moving average, down in the 26000s. The 21-DMA and the 50-DMA will likely be the first test for the bears. The bulls need to advance to the 27500s targets on a break of the 27200s - Trend-line resistance guards the July highs. 

Support levels: 26654 26696 25791

Resistance levels: 27180 27538 28043

 

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* All the Moving Average support and resistance levels are dynamic by nature. Means when the price approaches the Moving averages, slight variation occurs in the forecasted Moving Average support and resistance levels. Previous few days’ intraday levels are also signicant while trading the current day as the price tend to hover around these levels for some time. Levels in red indicate strong, critical or vital.

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