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Daily Market Report
03 Jan 2020

EURUSD

The EUR/USD is ending the day with losses, as the positive sentiment seen at the opening dissipated as the day gone by. The pair, however, remained confined to a tight intraday range as thin volumes persist. It topped at 1.1224, falling to 1.1163 during US trading hours. The dollar edged higher particularly against its high yielding rivals, easing, however, against those considered safe-havens. Wall Street opened with a strong note and continued to reach all-time highs.

Data failed to impress, with modest revisions to Markit Manufacturing PMI in both economies. The final version of the December German index was revised to 43.7 from 43.4, while for the whole Union, it resulted at 46.3 vs. the previous 45.9. On the contrary, the US one was downwardly revised to 52.4 from a preliminary estimate of 52.5.

This Friday, Germany will release the preliminary estimate of its December inflation, foreseen at 1.4% YoY, while the US will publish the official ISM Manufacturing PMI, expected in December at 49 from the previous 48.1, and the FOMC Meeting’s Minutes.

The EUR/USD pair is trading around the 38.2% retracement of its latest daily advance, bearish in the short-term. The 4-hour chart shows that the pair has extended its decline below a bullish 20 SMA, although it holds above bullish larger ones. Technical indicators, in the meantime, retain their sharp downward slopes within negative levels, coming straight from overbought levels.

Support levels: 1.1140 1.1110 1.1080

Resistance levels: 1.1190 1.1220 1.1260   

USDJPY

The USD/JPY pair fell to 108.20, its lowest in almost two months, weighed by falling US Treasury yields during US trading hours. Despite Wall Street continued rallying, bonds appreciated driving yields sharply lower in the first trading day of the year. The yield on the benchmark 10-year note fell to 1.85%, after peaking at 1.95% at the beginning of the day. Japan will return to business after a long holiday, but there are no macroeconomic data scheduled for release.

The USD/JPY pair has bounced from the mentioned low, ending the day at around 108.50. It has neared a mild-bullish 100 DMA for the first in almost three-months and fell for a fourth consecutive day, which reflects the increasingly bearish potential. In the shorter-term, and according to the 4-hour chart, the risk is also skewed to the downside, as the pair is developing below a firmly bearish 20 SMA, which already crossed below the larger ones, as technical indicators resumed their declines within negative levels, after correcting extreme oversold conditions.

Support levels: 108.40 108.10 107.70

Resistance levels 108.90 109.30 109.70 

GBPUSD

The GBP/USD pair has trimmed most of its Tuesday’s gains, settling at around 1.3130 after peaking at 1.3284 earlier this week. The dollar’s advance had no certain catalyst, but the Pound was hurt by local data, as the December UK Markit Manufacturing PMI came in at 47.5, slightly better than the previous estimate of 47.4, although below the expected 47.6. According to the official report, manufacturing output contracted at its fastest pace in almost seven-and-a-half years, as a result of “ declining intakes of new work from both domestic and overseas clients, while efforts to reduce Brexit safety stocks also stymied output volumes.”

The UK will release several macroeconomic figures this Friday, although the only relevant one is the December Markit Construction PMI, foreseen at 45.9 vs. the previous estimate of 45.3.

The GBP/USD pair has retreated from around the 61.8% retracement of its latest daily decline, now trading a handful of pips below the 38.2% retracement of the same slide, which favors a downward extension in the upcoming sessions. In the 4-hour chart, the pair is a few pips below its 20 SMA while battling with a directionless 100 SMA, as technical indicators challenge their midlines with sharp bearish slopes. The pair has several intraday lows around the 1.3100 figure, while the next Fibonacci support comes at 1.3050, a possible bearish target should the upcoming slide continues.

Support levels: 1.3100 1.3050 1.3010

Resistance levels: 1.3160 1.3200 1.3245

AUDUSD

The AUD/USD pair finally pared its winning streak, edging lower this Thursday to end the day below the 0.7000 figure. The slide, however, seems a mere correction as the pair remains roughly 200 pips above a long-term descendant trend line coming from 2018 high while trading a couple of pips below the 23.6% retracement of its latest bullish run.

China published the December Caixin Manufacturing PMI, which came in at 51.5, missing the market’s expectation of 51.8. The Australian Commonwealth Bank Manufacturing PMI  for the same month was downwardly revised to 49.2, adding to the Aussie’s bearish case. The country won’t release relevant data this Friday.

The AUD/USD pair could extend its decline during the upcoming hours, as the pair is below a now flat 20 SMA, although well above bullish 100 and 200 SMA. Technical indicators in the mentioned chart head south within negative levels, losing their downward momentum. The corrective movement could continue during the upcoming sessions toward the 0.6900 figure, without affecting the dominant bullish trend.

Support levels: 0.6960 0.6915 0.6880

Resistance levels: 0.7035 0.7080 0.7110

GOLD

Gold is still keeping its way up north although the USD index DXY and the equity markets are both trading on a positive tone. The People's Bank of China's (PBOC) decision to cut the Reserve Requirement Ratio (RRR) by 50 basis points to stimulate the economy also supported the risk sentiment across the globe. However, the safe haven also found demand and tested an important resistance on Thursday trading.

The retracement after 2019 peak (1.557$) which was not seen since mid-March 2013 seem to end after bottoming at 1.445$ level. As the 1.514$ (%61.80 1.557$-1.445$) resistance is now broken, we can expect the move to turn into an uptrend in the coming period. Over the important 1.514$ level, 1.530$ (%76.40 1.557$-1.445$), 1.557$ (2019 peak) and 1.600$ can be followed as resistances. Below the 1.500$ level, the support levels can be followed at 1.488$ (%38.20 1.557$-1.445$) and 1.472$ (%23.60 1.557$-1.445$) levels.

Support Levels: 1.500$ 1.488$ 1.472$

Resistance Levels: 1.530$ 1.557$ 1.600$


SILVER

Silver also joined to the positive tone seen on the markets as both risk-on and off assets are trading with an incline on Thursday. However, the white metal failed to stay over 18.00$ resistance at the time of the writing. As the world’s largest two economies agreed on a deal, for now, the expectations for manufacturing surge is supporting silver due to its industrial usage. 

Below the 17.60$ level, which is the %38.20 of 14.29$ and 19.64$ move the first support is located at  16.97$ (%50.0 14.29$-19.65$) and 16.33$ (%61.8 14.29$-19.65$). With a clear break of 18.00$ silver can test 18.38$ (%23.6 14.29$-19.65$) and 18.70$.

Support Levels: 17.60$ 16.97$ 16.33$

Resistance Levels: 18.38$ 19.00$ 19.64$

 

CRUDE WTI

WTI is still loosing is ground and trying to hold over 61.00$ although the rising tensions in the middle east threatening the oil production in general. On the other hand, the API report showed that US crude stocks fell 7.8 million barrels week ending 27 December, significantly greater than the 3.2 million forecasts, which should support the WTI price. Investors are now awaiting Friday’s EIA crude stock data for fresh direction.

As WTI is trying to hold over 61.00$, with a steady close over the 62.00$ level, 63.33$ (September high) and 66.56$ (April high) levels can be followed as resistances. Below the 61.00$ level, 60.43$ (63.33$-51.03$ %76.40) 60.00$ and 58.63$ (63.33$-51.03$ %61.80) levels can be followed as supports.

Support Levels: 61.00$ 60.43$ 60.00$

Resistance Levels: 62.00$ 63.33$ 66.56$


DOW JONES

After a short breath pause, Dow Jones started Thursday trading with a gap up and kept its way north the whole day refreshing its all-time high level. The People's Bank of China's (PBOC) decision to cut the Reserve Requirement Ratio (RRR) by 50 basis points to inject more than $100 billion into the economy supported the risk sentiment across the globe. Trump confirmed that he will be signing the phase-one deal on January 15th which also supported the positive market sentiment. 

Below the 28.400 handle, 28.000 and 27.770 can be followed as supports. On the other hand, resistances might be followed at 29.000, 29.500 and 30.000 levels.

Support Levels: 28.400 28.000 27.770

Resistance Levels: 29.000 29.500 30.000


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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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