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Daily Market Report
25 Oct 2019

EURUSD

The EUR/USD pair temporarily lost the 1.1100 threshold, falling to 1.1092, a fresh weekly low, to close the day with losses just above 1.1100. The slump was no surprise, considering the latest European Markit PMI suggested that the economic downturn extended into Q4. Manufacturing activity contracted further in October, according to preliminary estimates, as the German index contracted to 41.9, while for the whole Union, it edged higher to 51.5, beating expectations. Services indexes weakened when compared to the previous month.

The ECB had a monetary policy meeting, and, as expected, it was a non-event. No changes were announced to the current easing path, and President Draghi’s message was quite the usual on risk, growth, and inflation. In his last show, Draghi insisted on the need for an EU fiscal policy, something that he fought for in his eight years. He defended stimulus to his last breath and refused to comment on any future action or Mrs. Lagarde.

US data was mixed, as weekly unemployment claims improved to 212K in the week ended October 18, while Durable Goods Orders fell by 1.1% in September. The US preliminary October Markit PMI were generally encouraging with the Services Index matching market’s expectations with 51.0 and the Manufacturing index beating the forecast with 51.5. The Composite PMI resulted at 51.2, better than the previous 51.0, but below the expected 51.6.

 This Friday, Germany will release the November GFK Consumer Confidence Survey, seen at 9.8 from the previous 9.9, and the IFO Business Climate survey for October, foreseen at 94.5 from the previous 94.6. The US will publish the final version of the Michigan Consumer Sentiment Index for October, expected unchanged at 96.

The EUR/USD pair is trading around the 23.6% retracement of its latest daily advance, offering a short-term negative stance, as the pair has moved further below a now bearish 20 SMA in its 4-hour chart. Technical indicators in the mentioned chart hover fell into negative territory but currently lack directional strength. The pair has room to extend its decline toward 1.1065, the 38.2% retracement of the mentioned daily run, with the bearish case firmer if the level gives up. The chance of a bullish extension is now further away, as the pair would need to surpass 1.1180, this week’s high.

Support levels: 1.1095 1.1065 1.1030  

Resistance levels: 11145 1.1180 1.1210  

GBPUSD

The GBP/USD pair has fallen to 1.2788, its lowest in a week, amid growing political tension in the UK correlated to Brexit. The pair reached such a low after UK PM Boris Johnson called for a general election on December 12th. Johnson stated that the way to get Brexit done is to Parliament agreeing with the December election and that MPs could study the Brexit Bill before the dissolution, which would take place early November. He now needs to table the proposal and get it approved, something that’s looking less likely as the day goes by, as Labour and other opposition parties are against it, and good prefer to have first a guarantee against a no-deal Brexit. The mess continues fueling uncertainty and weighing on Sterling. In the Meantime, the EU27 is yet to confirm the extension, although it seems that it will be a three-month one.

The GBP/USD pair bounced from the mentioned low to settle around 1.2850, with the 4 hours chart showing that the pair remained capped for a second consecutive day by a now bearish 20 SMA. Technical indicators in the mentioned chart remain within negative levels, lacking directional strength, although adding to the bearish case. A break through the mentioned daily low will open the door for an extension toward the 1.2700 figure.

Support levels: 1.2830 1.2785 1.2740

Resistance levels: 1.2890 1.2930 1.2965

AUDUSD

The AUD/USD pair has fallen to 0.6810 this Thursday, pressured during the American session amid resurgent dollar’s demand. The pair was off to a weak start to the day amid mixed preliminary estimates of October  Commonwealth Bank PMI. Official data showed that services activity contracted to 50.8, although manufacturing activity beat expectations by printing 50.1, still below the previous monthly figure. Brexit-related headlines spurred demand for safe-haven assets, including the greenback. There are no macroeconomic figures scheduled in Australia for the upcoming Asian session.  

The AUD/USD pair is trading around the 38.2% retracement of its latest daily advance, technically bearish according to the 4-hour chart, as the pair has extended its slump below a now bearish 20 SMA, and as technical indicators hover near fresh weekly lows within negative levels. A steeper decline could be expected on a break below 0.6770, a mid-term static support.

Support levels: 0.6800 0.6770 0.6730  

Resistance levels: 0.6840 0.6875 0.6900

GOLD

Gold prices were mixed on Thursday, initially weighed by stock market earnings impressing and lifting investor's spirits before sentiment flipped-negative following the disappointing US Durable Goods data.

Spot prices managed to get through the psychological $1500 level as a result, piercing trend-line resistance having travelled from a low of $1488.07 to a high of $1504.09, closing the day around some 0.80% higher. December gold futures added on $9, or 0.6%, to settle at $1,504.70 an ounce, matching the prior day's percentage point advance. 

Technically, the price is testing the bear's commitments at trendline resistance where it meets the 1500 level, a psychologically important number which guards a run towards the 1520 area guarding prospects for a test back to the key 1535 resistance target. On failures to hold in the 1500s, bears, instead will be looking towards a 50% mean reversion of the late June swing lows to recent highs level around 1460/70.

Support levels: 1489 1480 1468 

Resistance levels: 1510 1522 1534


SILVER

Spot silver prices were trading 1.50% higher into the Wall Street close on Thursday, travelling between $17.48 and $17.85 moving in a firm straight line at the start of the US session. Silver for December delivery put on 22.4 cents, or 1.3%, to reach $17.804 an ounce, following a gain of 0.5% the prior day. The gold and silver ratio highlighted the strength in the white metal, falling around 0.80% on the day.   

From a technical basis, the bulls managed to score above the 21-day moving average in the 5th day since the price drifted beyond trendline resistance, albeit lacking conviction, yet supported by the 50-day moving average (DMA).  A break of the 50-DMA will likely see the trendline support come back under pressure, giving way to a 61.8% Fibonacci level down at 16.10, guarding the 200-day moving average at 16 the figure. Bulls, on the other hand, have the 18 handle in their sights and late September triple-top highs. 

Support levels: 17.47 17.22 16.90 

Resistance levels: 18.03 18.32 18.65


CRUDE WTI

West Texas Intermediate crude was ending Wall Street 0.50% higher on Thursday, (WTI), travelling from a low of $55.38 to a high of $56.47, reaching highest levels in around a month as following the prior day's unexpected weekly decline in U.S. crude supplies. Also, the belief that a potential US-Sino trade deal is in the making along with prospects of a central bank easing is helping to combat the concerns of a global slowdown and weaker demand for oil. 

Technically, the breach of the 55 handle has opened risk towards the 57 handle and the 200-day moving average (DMA) where it collides with a 38.2% Fibonacci retracement level. MACD is reaching its most recent peaks at this juncture. To the downside, the 50-DMA is located a fraction above 55 the figure while the 21-DMA comes in at 54.50. A break below the 21-DMA opens risk towards the Nov 2018 lows at 49.39 again ahead of the 18th Dec lows down at 45.77. 

Support levels: 56.12 54.93 53.62 

Resistance levels: 57.43 58.68 59.99

 

DOW JONES

US benchmarks ended mixed on Thursday, while the Dow was under the weather following a drop in the shares of 3M as corporate quarterly results kept traders alert and active on Wall Street with a handful of Dow components and 45 S&P 500 companies reporting earnings. The Dow Jones Industrial Average, DJIA, dropped 28.42 points, or 0.11%, to end the session at 26,805.53. The S&P 500 index, meanwhile, added 5.77 points to 3,010.29 and the Nasdaq Composite Index put on 66 points, or 0.81%, at 8,185.80.

The DJIA has made several consecutive bearish closes but the 21-DMA is proving to be firm support, although the lowest low since the series of bearish days started and a breach of the moving average makes for a fragile foundation at this juncture. A break back into the 27000s is required to stave off the risk of downside extension. A break below the 50-DMA opens risk to the 26200s and the 200-DMA in the same vicinity. 

Support levels: 26640 26503 26272

Resistance levels: 26885 27008 27253

 

UDSDJP

The USD/JPY pair continued trading uneventfully around 108.60, confined to an even tighter range this Thursday, although extending its weekly advance by a few pips to 108.74. The pair held on higher ground, despite a dismal market mood, as data coming from Japan was quite discouraging. According to the official release, the preliminary estimate of October. Jibun Bank Japan Manufacturing PMI)fell to 48.5 in October, the lowest level since June 2016, and signaling contraction for a sixth consecutive month. Also, the Leading Economic Index resulted at 91.9 in August, better than anticipated yet well below the previous, while the Coincident Index for the same month fell to 99.0.

Equities seesawed between gains and losses, but most indexes closed in the green, also underpinning the pair. US Treasury yields remained mute throughout the day. The Japanese calendar has nothing relevant to offer during the upcoming Asian session.

The USD/JPY pair remains technically neutral, according to readings in the 4-hour chart, seesawing around a flat 20 SMA, although with the larger ones maintaining their bullish slopes well below the current level. In the same chart, technical indicators hold around their midlines, lacking directional strength. As mentioned in previous updates, and given that the pair continues to hold at the upper end of its monthly range, the risk is skewed to the upside, eyeing a test of August monthly high at 109.31.

Support levels: 108.25 108.00 107.75

Resistance levels: 108.70 109.00 109.35

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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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