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Daily Market Report
06 Jan 2020

EURUSD

Risk aversion took over the financial world at the end of the week, following news that US President Trump ordered the killing of  Qassem Suleimani, Commander of Iranian forces at Baghdad´s airport. The dollar appreciated sharply against high-yielding rivals, with the EUR/USD pair falling to 1.1124. The Pentagon later declared that Suleimani was planning  attacks on Americans across the region, while Iran vowed  to take “severe revenge.” Tensions persist, as, over the weekend, US President Trump tweeted that the US is prepared to strike om 52 Iranian  “high level” sites that would be hit “fast and hard.”

The dollar pared gains and give up some ground after the release of the December ISM Manufacturing PMI, which resulted at 47.2, well below the expected 49 and at its lowest in a decade, helping EUR/USD to recover to the 1.1160 region. Nevertheless, equities closed in the red, while US Treasury yields plunged, as speculative interest remained cautious, something that would likely extend into the weekly opening. Also, the Federal Reserve released the Minutes of its latest meeting, which shows that policymakers believe it’s appropriated to keep rates steady.

In the data front, Germany will release November Retail Sales, seen up by 1.0% MoM, while Markit will release the Services PMI and the Composite PMI for the EU and the US.

The daily chart for the EUR/USD pair shows that it settled below the 38.2% retracement of its latest advance at 1.1172, the immediate resistance. The same chart shows that the pair bottomed at around the 61.8% retracement of the same advance, also meeting buyers near a bullish 20 SMA. Technical indicators, however, maintain their bearish slopes and are about to cross their midlines into negative territory. In the shorter-term, and according to the 4-hour chart, the risk is skewed to the downside, as the 20 SMA heads south above the current level, while technical indicators resumed their declines after correcting extreme oversold conditions.  

Support levels:  1.1115 1.1080 1.1040

Resistance levels: 1.1190 1.1220 1.1260   

USDJPY

The USD/JPY pair has fallen to 107.83, it’s lowest in almost three months, as speculative interest rushed into safety following news that the US killed a top Iranian Commander. Fear dominated the financial world, fueling demand for safe-haven assets, while dismal US data added to the bearish case of the pair, with the US ISM Manufacturing PMI hitting its lowest in ten years. The yield on the benchmark 10-year Treasury note fell to 1.79%, its lowest in a month, while worldwide indexes closed in the red. Japan will release this Monday the December Jibun Bank Manufacturing PMI, previously at 48.8.

The USD/JPY pair finished the week just above 108.00, and around its 100 DMA, the first time around this last in over two months. It also broke below the 20 and 200 DMA, while daily indicators head south almost vertically and near oversold levels, all of which skew the risk to the downside. In the 4-hour chart, the pair is at risk of falling further, as, despite technical indicators recovered modestly from oversold levels, they hold below a bearish 20 SMA, which extends its slide below the larger ones.

Support levels:  107.70 107.30 106.95

Resistance levels 108.45 108.90 109.30 

GBPUSD

The GBP/USD pair fell for a second consecutive day on the back of fears about a war between the US and Iran, ending the week near its Friday’s low of 1.3051. Furthermore, UK data came in worse than expected, as the December Markit Construction PMI resulted at 44.4, below the expected 45.9 and the previous 45.3. Consumer Credit fell in November, although Mortgages Approvals improved slightly in the same period.

In the Brexit front, UK PM Johnson was said to open talks with the EU on their post-Brexit relation next week, when Ursula Von der Leyen, President of the European Commission, visits Downing Street. This Monday, Markit will release the UK December Services PMI, foreseen at 49.2 vs. the previous 49.

The GBP/USD pair has pulled back from the 61.8% retracement of its December decline, bottoming at around the 23.6% retracement of the same slide. The pair is technically bearish according to the daily chart, as it closed the week below its 20 DMA, while technical indicators offer bearish slopes within negative levels. In the 4-hour chart, the pair is developing below its 20 and 100 SMA, while the 200 SMA converges with the mentioned Fibonacci support. Technical indicators, in the meantime, continue heading south below their midlines, in line with further declines ahead.

Support levels: 1.3050 1.3010 1.2970

Resistance levels: 1.3125 1.3160 1.3200  

AUDUSD

The AUD/USD pair continued retreating from 0.7031, a 5-month high, to close the week with modest losses around 0.6950. On Friday, the Aussie was dragged lower by collapsing equities amid the dominant risk-averse mood. The pair bottomed at 0.6929, bouncing from the level after a dismal US report interrupted the USD rally. Australia didn’t release macroeconomic data at the end of the week but will publish the December Commonwealth Bank Services PMI, foreseen at 49.5, and the Composite PMI for the same period this Monday.

During the weekend, the Chinese Central Bank stated that it will keep its monetary policy prudent, flexible, and appropriate, and continue to deepen financial reforms, repeating its well-known stance.

The AUD/USD pair has corrected the 50% of its latest daily advance but didn’t yet offer a bearish stance, although the risk has increased. In the daily chart, the pair continues developing above all of its moving averages, and with the 20 DMA crossing above the 200 DMA, both around 0.6900, providing a critical dynamic support. Technical indicators have turned sharply lower, but so far holding above their midlines. In the 4-hour chart, however, the risk is skewed to the downside, as the 20 SMA heads south above the current level, while technical indicators resumed their declines after a modest correction, currently near oversold readings. The immediate support comes at 0.6915, where the pair has the 61.8% retracement of the mentioned rally.

Support levels: 0.6915 0.6880 0.6840

Resistance levels: 0.6960 0.7000 0.7035  

GOLD

On the last trading day of the week, Gold benefitted the risk aversion caused by the US hitting Qassem Suleimani, Commander of Iranian forces at Baghdad´s airport. The Pentagon later stated that Suleimani was planning attacks on Americans across the region, while Iran vowed to take “severe revenge” on military compounds. Also, over the weekend, US President Trump tweeted that the US is prepared to strike on 52 Iranian  “high level” sites that would be hit “fast and hard”, sending additional troops to the region. As a result of the risk aversion, Gold spiked around %1.5 on a daily bases and the Wall Street retraced back heavily.

Over the 1.530$ (%76.40 1.557$-1.445$) resistance, 1.557$ (2019 peak), 1.600$ and 1.615$ can be followed as resistances. Below the 1.530$ (%76.40 1.557$-1.445$) level, the support levels can be followed at 1.514$ (%61.80 1.557$-1.445$) and 1.500$ levels.

Support Levels: 1.530$ 1.514$ 1.500$

Resistance Levels: 1.557$ 1.600$ 1.615$


SILVER

Silver also spiked on Friday trading but failed to keep its gains and retraced back staying slightly over 18.00$ level, still in a positive zone. The strike in Baghdad which was ordered by President Donald Trump killed Qassem Soleimani, the Iranian general who led the Revolutionary Guards' Quds force. Iran's supreme leader, Ayatollah Ali Khamenei, vowed "severe retaliation." As a typical market reaction, safe havens like Gold and Silver gained traction and risk assets retraced back.

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 benefited the rising tensions in the middle-east as the US strike ordered by President Trump killed Qassem Soleimani, the Iranian general who led the Revolutionary Guards' Quds force along with other high-rank officials. Iran's supreme leader, Ayatollah Ali Khamenei, stated that there will be revenge attacks to the US military compounds and the US responded with sending more troops to the region. On the other hand, the weekly data published by the Energy Information Administration (EIA) on Friday revealed that crude oil stocks in the US fell by 11.4 million barrels during the week ending December 27th  Along with the developments, WTI spiked %3.0 on a daily basis and closed the week over 63.00$

Over the 62.00$ level, the resistances might be followed at 63.33$ (September 2019 high) and 66.56$ (April 2019 high). Below the 60.43$ (63.33$-51.03$ %76.40) level, the supports can be followed at 60.00$, 59.64$ (76.88$-42.40$ %50.00) and 58.63$ (63.33$-51.03$ %61.80) levels.

Support Levels: 60.00$ 59.64$ 58.63$

Resistance Levels : 63.33$ 66.56$ 70.00$


DOW JONES

Dow Jones retraced back almost %1.00 on Friday trading as the strike in Baghdad which was ordered by President Donald Trump killed Qassem Soleimani, the Iranian general who led the Revolutionary Guards' Quds force. Iran's supreme leader, Ayatollah Ali Khamenei, vowed "severe retaliation." and The military adviser to Iran's Supreme Leader told CNN that his country's response will certainly be a military response "against military sites." On the other hand, the US deployed more troops to the region as the tensions spiked. Alongside the geopolitical tensions, the markets will be following the first NFP data on Friday.

On the technical side, 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


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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