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Daily Market Report
22 Oct 2019

EURUSD

The EUR/USD pair has started the week gapping modestly lower, but the market quickly digested weekend news, with most major pairs trading dully throughout the day amid a scarce macroeconomic calendar and the persistent uncertainty. The greenback managed to recover some ground in US trading hours, yet the pair is finishing the day barely lower at around 1.1150. Brexit is on pause ahead of the next round of MPs’ votes, exacerbating the wait-and-see stance.

Germany released the September Producer Price Index, which resulted slightly better-than-expected, up in the month by 0.1% and down yearly basis by 0.1%, while there were no macroeconomic data published by the US. This Tuesday, the calendar will remain light, as there is no data scheduled to release in the EU, while the US will publish minor figures, including September Existing Home Sales and the October Richmond Fed Manufacturing Index.

The EUR/USD pair has reached a fresh October high of 1.1179 before giving up some ground, retaining the bullish potential in the short-term. In the 4-hour chart, the pair has spent the day developing well above all of its moving averages, with the 20 SMA maintaining its firmly bullish slope far above the larger ones. Technical indicators have eased from extreme overbought levels, the Momentum heading south within positive levels and the RSI currently flat at around 66, far from suggesting an upcoming decline. A bearish corrective movement could happen on a break below 1.1140, while the pair would likely run well into the 1.12 area once above 1.1180.

Support levels: 1.1140 1.1100 1.1065  

Resistance levels: 1.1180 1.1210 1.1250

USDJPY

The USD/JPY pair settled around 108.60, recovering after a soft start to the day. The Japanese yen enjoyed some temporal demand at the beginning of the day, with the pair falling to 105.28, as concerns about Brexit developments favored the safe-haven currency. The dismal mood was short-lived but didn’t turn into a positive one. By the end of the day, equities closed with modest daily gains, while government bond yields ticked marginally higher, backing the pair’s recovery.

Japan published this Monday the September Merchandise Trade Balance, which posted a smaller-than-anticipated adjusted deficit of ¥-97.2B. In the same month, Imports declined by 1.5%, while exports slid 5.2%. It’s a bank holiday in Japan this Tuesday, which means no macroeconomic announcement will be made.

The USD/JPY pair has bounced from around the 23.6% retracement of its latest daily advance, which indicates that bulls retain control of the pair. In the short-term, however, the 4-hour chart shows that it remained capped by a directionless 20 SMA, while technical indicators remain flat around their midlines, reflecting the ongoing wait-and-see stance. The bullish case remains alive, with buyers targeting 109.31, August monthly high.

Support levels: 108.25 108.00 107.75

Resistance levels: 108.65 109.00 109.35

GBPUSD

The GBP/USD pair has started the week with a sour tone, falling to 1.2878 on the back of weekend Brexit developments. UK PM Johnson’s latest Brexit deal didn’t make it to the Parliament, as MPs voted ahead an amendment to prevent a hard-Brexit, forcing PM Johnson to back up his decision to submit the deal to the Parliament. The pair recovered from such a low and reached 1.3012, its highest in five months, as the delay on Brexit is seen as positive. John Bercow, Speaker of the House of Commons, ruled that he won’t allow MPs to have a “meaningful vote” on Boris Johnson’s Brexit deal today, as the circumstances haven’t changed, pushing GBP/USD marginally lower. Then, House of Commons leader Rees-Mogg announced that a second reading of the Withdrawal Agreement will take place Tuesday. In the meantime, the EU27 is yet to decide on Johnson’s extension letter.

The UK macroeconomic calendar includes this Tuesday, September Public Sector Net Borrowing and the October CBI Industrial Tend Survey on Orders.

The GBP/USD pair is trading in the 1.2960/70 area, not far from Friday’s close. The intraday decline seems a mere correction when considering the pair has advanced roughly 850 pips in the previous two weeks.  In the 4-hour chart, the pair remains above a bullish 20 SMA, with approaches to the indicator attracting buying interest. Technical indicators have turned lower but hold within positive ground, with the RSI currently at around 66, far from enough to confirm an upcoming bearish extension.

Support levels: 1.2930 1.2880 1.2825

Resistance levels: 1.2995 1.3030 1.3085

AUDUSD

The AUD/USD pair peaked for the day at 0.6879, its highest since mid-September. Commodity-linked currencies out-stood this Monday, being the best performers against the greenback despite weaker oil and gold prices. In the case of the Aussie, the People Bank of China’s decision to leave rates unchanged at 4.2% lend support, as well as comments from US President Trump. Mid-US afternoon, Trump stated that the trade deal with China was “coming along great,” adding that he hopes to sign a deal with China at the Chile APEC summit, scheduled for next November. There are no macroeconomic releases scheduled in Australia this Tuesday.

The AUD/USD pair retreated from the mentioned high but hold on to modest gains ahead of the Asian opening, trading around 0.6865. In the 4-hour chart, technical indicators retreated from extreme overbought readings, the Momentum heading sharply lower within positive levels, and the RSI currently at around 71. Furthermore, the 20 SMA maintains its bullish slope below the current level and above the larger ones, suggesting limited selling interest around the pair.

Support levels: 0.6850 0.6820 0.6795  

Resistance levels: 0.6900 0.9630 0.6960

GOLD

As risk appetite returns, Gold eased back to $1,485/oz on a spot basis while Gold for December delivery on Comex ended $6, or 0.4%, lower at $1,488.10 an ounce. 

Bears stay in control and that 50% mean reversion of the late June swing lows to recent highs level around 1460/70 remains compelling on the downside. Bulls will need to get back above and close through the 50-DMA for a re-run of the 1500 level ahead of the 1520 area and the1535 resistance target. 

Support levels: 1480 1468 1458 

Resistance levels: 1488 1500 1510

 

SILVER

The price of the white metal rose for its industrial qualities as risk sentiment improved at the start of the week.  Spot prices climbed from a low of $17.51 to a high of $17.87, adding 0.11% into the Asian open while December silver added  2.4 cents, or 0.1%, to settle at $17.602 an ounce after trading as high as $17.895 during the US day. 

The price remains in consolidation on the 17 handle but bulls have staved off a re-run to the downside so far at this juncture with repeated failures at the 21-DMA. However, the barish pin bar has added to the bearish outlook and 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 15.95s.

Support levels: 17.46 17.21 16.90 

Resistance levels: 17.78 18.04 18.35

 

CRUDE WTI

Weighed by the supply-side fundamentals, West Texas Intermediate crude was trading down -0.23% on a spot basis into early Asia, having travelled from a high of $54.02 to a low of $52.70 on the day. As for WTI crude futures contract for November delivery, it lost 47 cents, or 0.9%, to end at $53.31 a barrel on the New York Mercantile Exchange and followed a 1.7% weekly decline. 

On a longer-term chart basis, the outlook stays bearish considering the GMMAs and the price being capped by the 21-day moving average. 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 levels: 52.43 51.14 49.88

Resistance levels: 53.65 54.90 56.15

 

DOW JONES

The DJIA added 57.44 points, or 0.2%, to close at 26,827.64 on the day, despite Boeing Co.’s stock BA falling towards a two-month low, down 3.8%, following last Friday's news that misled federal aviation authorities about the safety of the 737 Max jet – This was making for a 70-point drag on the index. Elsewhere, the S&P 500 index put on 20.52 points, or 0.7%, to close around 3,006.72 and within inches of its closing high of 3,025.86 set on July 26. The Nasdaq Composite Index added 73.44 points, or 0.9%, to close at 8,162.99.

The DJIA remains below the 27000s and prior trendline support, albeit now up to test the 200-hour moving average. On the downside, the 21 and 50-day moving average are guarding a run to the 200-day moving average, down in the 26000s. The bulls need to advance to the 27500s targets on a break of the 27200s - Trend-line resistance guards the July highs. 

Support levels: 26640 26503 26272

Resistance levels: 26885 27008 27253

 

MACROECONOMIC EVENTS

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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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