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Daily Market Report
09 Jan 2020

EURUSD

The American currency is the overall winner this Wednesday, up against all of its major rivals. The day began with panic and sellers rushing into safe-haven assets, as Iran attacked US military basis in Iraq, in retaliation to the killing of Major General  Suleimani last week. The EUR/USD pair appreciated just modestly to hit a daily high of 1.1167, but it was all downhill from there. Sentiment improved as authorities from both countries hinted a deescalation of hostilities, with US President Trump offering a speech post-London close. Among other things, he said that Iran appears to be standing down, announced more sanctions on the country, but no other retaliation, pouring cold water on chances of more hostilities.

Macroeconomic data also weighed on the pair, as  German Factory Orders plummeted in November, down by 1.3% MoM and by 6.5% YoY, well below the market’s expectations of a bounce. The US ADP survey showed that the private sector added 202K new jobs in December, largely surpassing the 160K forecast, and hinting a solid Nonfarm Payroll report, to be out later this week.

On Thursday, Germany will take centre stage, as it will publish November Trade Balance and Industrial Production, this last seen up by 0.7% MoM and down by 3.8% YoY. The US calendar will be lighter as it will only release the usual weekly unemployment figures.

The EUR/USD pair settled at around 1.1110, below the 61.8% retracement of its latest December rally and barely above its daily low. The pair is technically bearish according to the 4-hour chart, as it is comfortable below its 20 and 100 SMA, with the shortest accelerating its decline. The 200 SMA, in the meantime, provides dynamic support around the 1.1100 figure. Technical indicators indicate an increasing bearish pressure, maintaining their bearish slopes near oversold readings.

Support levels: 1.1100 1.1065 1.1020

Resistance levels: 1.1135 1.1160 1.1200

USDJPY

The USD/JPY pair fell to 107.64 during Asian trading hours and following news indicating that Iran launched a missile attack on US military facilities, a level last seen in October last year. Fears receded following a statement from Mohammad Javad Zarif, Iran’s foreign minister, who declared that the country “took and concluded proportionate measures in self-defense,” adding they won’t seek escalation or war. US President Trump further cooled concerns later in the day, pushing the pair to 109.19 its highest for the week.

Wall Street soared, commodities plunged, while government debt yields were up with the yield on the benchmark 10-year Treasury note hit 1.87%. This Thursday, the Japanese calendar has nothing relevant to offer, which means sentiment will continue to lead the way.

The USD/JPY pair is heading into the Asian opening at around its daily high, maintaining its bullish stance in the short-term, after advancing beyond the 61.8% retracement of its latest daily decline. In the 4-hour chart, the pair is above all of its moving averages, with the 20 SMA accelerating its advance well below the current level. Technical indicators, in the meantime, have lost their upward momentum, but hold near overbought levels with no signs of upward exhaustion. Bulls will retain the lead as long as the pair holds above 108.90, a strong static support level.

Support levels: 108.90 108.50 108.10  

Resistance levels: 109.35 109.70 110.00

GBPUSD

The GBP/USD pair remained under pressure, ending the day with modest looses around the 1.3100 figure. Speculative interest is in wait-and-see mode with Sterling ahead of the UK Parliament vote on PM Johnson’s Withdrawal Agreement Bill, expected to take place this Thursday. The kingdom published the Halifax House Price Index, which increased by 4.0% in the three months to December, beating the market’s expectations.

During US trading hours, the Prime Minister spokesman announced that there wouldn’t be an extension to the post-Brexit transition period.  European Commission President Ursula von der Leyen, however, said that she believes that a full EU-UK partnership deal can’t be achieved by the end of 2020. Nevertheless, the financial world was all about Middle-East tensions,  which ended up skewing the scale in the dollar’s favor. This Thursday, the UK will publish the BRC Like-For-Like Retail Sales report, while BOE’s Governor Carney is set to deliver a speech.

The GBP/USD pair is hovering around the 1.3100 figure with a bearish stance in the short-term. Throughout the day, the pair was unable to sustain gains above 1.3150, a Fibonacci resistance. In the 4-hour chart, the pair is below its 20 and 100 SMA, while technical indicators stand below their midlines, with moderate downward strength. The next Fibonacci support comes at 1.3050, with bears probably pushing the pair further lower on a break below it.

Support levels: 1.3090 1.3050 1.3010

Resistance levels: 1.3150 1.3190 1.3225

AUDUSD

The Australian dollar remained under pressure throughout the first half of the day, extending its decline against the greenback to 0.6848. The AUD/USD pair, however, recovered some ground to end the day with modest gains around 0.6870, helped by an improved market mood during the American afternoon, this last, triggered by US President Trump’s comments. In a prepared speech, Trump said that no American citizen was harmed in the latest Iranian attack on US military facilities, and hinted no further retaliation.

Australian Building Permits were up by 11.8% in November, a nice recovery from the previous -7.9%, but remained in the red yearly basis, down by 3.8% when compared to November 2018. This Thursday, Australia will release its November Trade Balance.

The AUD/USD pair spent the day consolidating losses at around the current level, and the risk of a bearish extension is still high. In the 4-hour chart, the 20 SMA keeps heading lower above the current level and after crossing below the 100 SMA, while technical indicators consolidate near weekly lows. Further slides are to be expected on a break below 0.6840, the immediate support, with scope then for an extension toward 0.6770.

Support levels: 0.6840 0.6800 0.6770

Resistance levels: 0.6900 0.6945 0.6980

GOLD

Gold had a very interesting trading day on Wednesday as Iran counter missile attack to US bases in Iraq hit the wires. Iran fired more than a dozen ballistic missiles at two Iraqi military bases housing US troops. Although the US and Iraqi officials reported no casualties, Iran claimed that 80 American soldiers were killed during the attacks which they claimed right against killing the top Iranian general last week. The shocking event first sent the yellow metal to 1.611$, which is the highest level since April 2013. After the event, all the market players focused on Trump’s speech to position themself to a worsening situation. However, Trump’s speech was totally dovish stating due to the early warning system, no one from both the US and Iraq was harmed. Also, the president stated that they do not want war with Iran and highlighted that Iran has a huge potential to be a great country. The dovish comments hammered the Gold’s price and pushed it all the way to 1.550$ region.

The daily trading range measured at 60$ in an eventful trading day on Wednesday. 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$

Gold

SILVER

Silver followed the same fashion on Wednesday too. As the Iran missile attack news hit the wires, the bullion tested 19.00$ which was last seen on November 2016. After the first shock of the event, Trump’s dovish press conference which decreased the tension caused a sell-off and Silver retraced back to 18.00$ handle.  

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$-19.65$). 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$

XAGUSD

CRUDE WTI

Oil prices spiked up last Friday due to rising tensions caused by the US attack which killed a top Iranian general. After the attack, the black gold retraced back on the first two trading days of the week until Iran responded to America with coordinated missile attacks to two bases located in Iraq. The shocking news catapulted oil and gold prices immediately, sending WTI to 65.62$ level which was last seen in April 2019. However, in his prepared statement on Wednesday, President Trump stated that no Americans were harmed from Iranian missile strikes on US bases in Iraq and said Iran was appearing to be standing down. "The US is ready to embrace peace with all who seek it," Trump added also highlighting they are ready to replace the nuclear deal which was made in 2015. As Trump’s statement de-escalates the event, oil prices hammered with around %5 decline on a daily basis.

On the top side, a new break over 60.00$ can lead the way to 60.43$ (63.33$-51.03$ %76.40) and 61.80$ (76.88$-42.40$ %61.80) while the supports are lined at 58.63$ (63.33$-51.03$ %61.80), 57.13$ (63.33$-51.03$ %50.00) and 55.73$ (63.33$-51.03$ %38.20).  

Support Levels: 58.63$ 57.13$ 55.73$ 

Resistance Levels: 60.00$ 60.43$ 61.80$

oil

DOW JONES

As an initial reaction to an Iranian attack on the US military bases located in Iraq, risk-off kicked into the markets. While safe-haven assets and oil rocketed, indexes had a sell-off due to concerns of the US answer to the attacks. However, surprisingly Trump’s statement about the event was extremely dovish which turned the risk sentiment upside down. Trump stated that no American personnel was wounded during the missile attack on military bases in Iraq. He also said the US will impose more powerful sanctions on Iran. Trump is now looking for a new deal with Iran and he wants NATO to increase its participation in Middle East operations. As the tension lowering statement hit the wires, Dow Jones marched through its all-time high levels close to 28.900.

Resistances might be followed at 29.000, 29.500 and 30.000 levels while below the 28.400 handle, 28.000 and 27.770 can be followed as supports.

Support Levels: 28.400 28.000 27.770

Resistance Levels: 29.000 29.500 30.000

DowJones

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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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