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Daily Market Report
07 Jan 2020

EURUSD

The EUR/USD pair is ending the first day of the week with modest gains, having traded between 1.1153 and 1.1205. Fears dominated the first session of the day, amid persistent tensions between the US and Iran after US President Trump ordered the killing of a top Iranian Commander last Friday. The shared currency managed found support during London trading hours on better-than-expected data, as the final versions of Markit output indexes were revised higher. The German Services PMI printed 52.9, while the EU Services PMI was revised to 52.8, better than the previous estimate of 52.4. However, the Composite index came in at 50.9, with the modest improvement, still indicating weak economic growth.

The greenback managed to recover some ground post-Wall Street’s opening, as US Markit PMI were also upwardly revised as the Services index came in at 52.8while the Composite PMI resulted in 52.7, both also beating expectations. US data helped to partially offset fears, with equities trimming most of their intraday losses ahead of the close.

This Tuesday, the EU will release November Retail Sales, seen up by 0.6% MoM, and the preliminary estimate of December inflation. EU’s CPI is expected to have risen by 1.3% YoY. Later in the day, the US will release the official ISM Non-Manufacturing PMI, foreseen at 54.5 in December from 53.9 in the previous month.

The EUR/USD pair spent most of the last trading session of the day hovering around the 23.6% retracement of the latest daily advance, settling around the 1.1200 figure. The bullish potential is limited according to the 4-hour chart, as the pair is struggling to retain gains above a mild-bearish 20 SMA but holding above the larger ones, which retain their bullish slopes. Technical indicators have turned lower, the Momentum within neutral levels, and the RSI at around 55. The risk of a downward extension will increase on a break below 1.1140, a static support level.

Support levels: 1.1170 1.1140 1.1110

Resistance levels: 1.1205 1.1240 1.1285  

USDJPY

The USD/JPY pair bounced from a daily low of 107.76, to close the day near its daily high of 108.41, as better than expected US data helped the dollar to recover some ground. Also leaning support to the pair, Wall Street trimmed most of its intraday losses, with US indexes mixed at the end of the day. Additionally, US Treasury yields revert their early decline to end the day unchanged from Friday’s closing levels.

No macroeconomic data were coming from Japan at the beginning of the week, and the country will only release minor figures during the upcoming Asian session, December Monetary Base and Vehicle Sales for the same month.

The USD/JPY pair recovered part of the sharp losses it suffered in the past week, but the advance stalled ahead of the 38.2% retracement of such slump, which indicates that the pair still has chances of resuming its decline. In the 4-hour chart, the 20 SMA has lost its downward strength, with the pair settling a few pips above it, while technical indicators recovered from oversold readings, holding within negative levels with uneven strength. The pair needs to extend its recovery beyond 108.50, the immediate Fibonacci resistance to shrug off its negative stance.

Support levels: 108.00 107.70 107.30  

Resistance levels 108.50 108.90 109.30 

GBPUSD

The GBP/USD pair surged to 1.3174, as panic selling stalled mid-European session following encouraging data from different economies, which helped worldwide indexes recover from intraday lows. In the case of the UK, the Markit Services PMI for December printed at 50, better than the 49.2 expected. According to the official report, “ the stabilization of service sector output was helped by a return to improving order books, as signaled by the sharpest rise in new work since last July.”

Meanwhile, UK PM Johnson announced that the UK would conduct post-Brexit trade talks with the US while it negotiates the terms of the future relationship with the EU. This week, EU Commission President, Ursula Von der Leyen will head to London reportedly to start talks with Johnson. There are no data scheduled for release in the UK this Tuesday.    

The GBP/USD pair recovered after two days of sharp losses, settling in the 1.3160 price zone, just above the 38.2% retracement of its December slump. The pair offers a neutral stance in the short-term, as, in the 4-hour chart, it is hovering around a flat 20 SMA, while the 100 and 200 SMA also lack directional strength. Technical indicators recovered and currently head north, although the Momentum remains below its 100 level. Further gains are more likely on a break above the 1.3200 figure, en route to 1.3284, the high set on Dec 31.

Support levels: 1.3135 1.3090 1.3050  

Resistance levels: 1.3200 1.3240 1.3285

AUDUSD

The Australian dollar was the greenback’s weakest rival, with the AUD/USD pair edging lower for a third consecutive day. The AUD/USD pair fell to 0.6924, following the lead of Asian and European stocks, and despite soaring gold prices. Upbeat US data kept the upside limited for the pair during US trading hours, in spite of Wall Street’s recovery. The Aussie was weighed Chinese data, as the Caixin Services PMI declined to 52.5 in December, after printing at 53.5 in November.

The Australian Commonwealth Bank Services PMI for December came in at 49.8, better than the expected 49.5, while the Commonwealth Bank Composite PMI resulted at 49.6. This Tuesday, Australia will release the December ANZ Job Advertisements report.

The AUD/USD pair is down to the 50% retracement of its latest daily advance, and bearish according to intraday technical readings. In the 4-hour chart, the 20 SMA further accelerated south above the current level, while technical indicators barely corrected oversold conditions before turning flat within negative levels. The 61.8% retracement of the mentioned rally comes at 0.6915, the immediate support and the level to break to anticipate another bearish day.

Support levels: 0.6915 0.6880 0.6840

Resistance levels: 0.6960 0.7000 0.7035  

GOLD

Gold managed to keep its fifth winning strike with the support of the rising tensions in the middle-east. The safe-haven tested its highest level around 1.587$ since April 2013 but retraced back. According to a statement on state-run news agency IRNA, Iran will no longer limit itself to the nuclear restrictions set forth in 2015 by the Joint Comprehensive Plan of Action (JCPOA). On the other hand, the US is sending thousands of additional troops to the Middle East in response, according to a defence official. Meanwhile, Iraqi lawmakers voted to expel US forces from the country. Apart from the geopolitical tensions, the positive sentiment regarding the phase-one deal is limiting Gold for further gains.

The first resistance for Gold might be followed at the physiological level of 1.600$. Over this level, 1.615$ (April 2012-March 2013 support/resistance line) and 1.650$ can be followed as resistances. Below the 1.557$ (2019 peak), 1.530$ (%76.40 1.557$-1.445$) and 1.514$ (%61.80 1.557$-1.445$) levels can be followed as support levels.

Support Levels: 1.557$ 1.530$ 1.514$

Resistance Levels: 1.600$ 1.615$ 1.650$


SILVER

Silver also followed the fashion as the tension between the US and Iran is escalating. On the first trading day of the week, Silver managed to build its ground over the 18.00$ level but failed to break 18.34$ resistance testing its highest level since late September 2019.

From the technical point of view, 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$-19.65$). On the other hand, as long as Silver stays over 18.00$, the resistances can be followed at 18.38$ (%23.6 14.29$-19.65$), 18.70$ and 19.00$.

Support Levels: 17.60$ 16.97$ 16.33$

Resistance Levels: 18.38$ 18.70$ 19.00$

 

CRUDE WTI

After the strong incline last Friday as a result of the rising tensions in the middle-east, WTI retraced back and gave away some of its gains on Monday trading after testing its highest level since April 2019. As the trade deal now seems on track, geopolitical tensions will likely the main risk driver until a resolution is made.

WTI failed to test the 65.00$ level and was trying to defend the 63.00$ level at the time of the writing. 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: 60.43$ 59.64$ 58.63$

Resistance Levels : 63.33$ 66.56$ 70.00$


DOW JONES

Wall Street is in a wait and sees mode after the tension between the Us and Iran escalated last week. On the other hand, rising oil prices with the fears of disruption in production are supporting the energy shares and limiting further retracement in the US indexes. Apart from Iran, the Iraq government stated that they are ready to send back all the US troops adding extra stress to the current situation.

Dow Jones index is still trying to hold over 28.400 support amid geopolitical tensions. 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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