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Daily Market Report
14 Jan 2020

EURUSD

A mildly positive mood has dominated the financial scene on Monday, weighing on those considered safe-haven assets. The EUR/USD pair, however, was unable to catch a bid, spending the day in a well-limited range. It hit a daily high of 1.1146 during the American session, boosted by news indicating that the US would remove the tag of “currency manipulator” on China, before both countries sign phase one of the trade deal later this week.  

The absence of macroeconomic releases limited further the intraday range for the pair. This Tuesday, the US will release the final version of December CPI, with the annual inflation seen at 2.3%. Despite the risk-on sentiment, the shared currency is having a hard time to extend gains against the greenback, somehow suggesting that the market is waiting for a reason to resume dollar’s buying.

The EUR/USD pair is currently trading at around 1.1135, just above a strong Fibonacci level. It’s technically bullish in the short-term and according to the 4-hour chart, as technical indicators hold within positive levels, and at fresh 1-week highs, although losing upward strength. The price, in the meantime, is struggling with a flat 100 SMA, with all moving averages lacking directional strength. The bullish potential, however, seems limited, as sellers have been adding on approaches to the 1.1200 level. The pair would need to run past 1.1240 to become more attractive to bulls, yet the fundamental scenario doesn’t favor such advance.

Support levels: 1.1090 1.1065 1.1020

Resistance levels: 1.1135 1.1160 1.1200

USDJPY

The USD/JPY pair traded as high as 109.94, a level that was last seen in May 2019, as speculative interest kept dumping safe-haven assets. As Middle-East tensions continue to ease, although remain latent in the background, the market’s attention shifted to the US-China trade relationship. Both economies are expected to sign phase one of the trade deal next Wednesday, and ahead of the event, the US was reportedly said to be removing the currency manipulator tag on China.

Japan started the week with a holiday and didn’t release relevant data at the beginning of the day. This Tuesday, however, the country will release November trade data, with an expected trade deficit of 412.6B yen. The country will also release the December Eco Watchers Survey, with the Outlook seen deteriorating from 45.7 to 44.7, and the Current seen at 36.9 from 39.4.

The USD/JPY pair holds on to intraday gains ahead of the Asian opening, trading a couple of pips below the mentioned high. The short-term picture is positive, although the pair needs a, so far, absent momentum to be able to extend its gains beyond the critical 110.00 level. In the 4-hour chart, technical indicators stand pat, the Momentum above its mid-line and the RSI at around 75. A bullish acceleration is expected once beyond the mentioned psychological level toward the 110.60/80 price zone.

Support levels: 109.70 109.35 108.90

Resistance levels: 110.00 110.40 110.75

GBPUSD

It was a bad day for Pound. Weekend comments from BOE’s Vlieghe, indicating that he will vote in favour of a looser monetary policy, triggered a bearish gap in GBP/USD at the weekly opening. The gap remains unfilled, as UK data released during London trading hours missed the market’s expectations further weighing on Sterling and sending the pair as low as 1.2960. Industrial Production fell by 1.6% YoY in November, worse than the -1.4% expected, while Manufacturing Production declined in the same period by 2.0%.

More concerning, the monthly Gross Domestic Product was down by 0.3%., while the NIESR GDP Estimate for the three months to December came in flat, better than the expected 0.3% decline. The UK calendar would have nothing to offer this Tuesday.

The GBP/USD pair has recovered from the mentioned daily low but can’t regain the 1.3000 mark by the end of the day. The pair is bearish according to the 4-hour chart, at it is currently developing below all of its moving averages, and with the 20 SMA extending its bearish slope below the larger ones. Technical indicators in the meantime, remain within negative levels, with neutral-to-bearish slopes.

Support levels: 1.2960 1.29251.2885

Resistance levels: 1.3010 1.3060 1.3100

AUDUSD

The AUD/USD pair posted a modest advance this Monday, surging to 0.6919 and settling a few pips above the 0.6900 level. Up for a second consecutive day, the Aussie was underpinned by a generalised positive mood, with most indexes closing the day in the green and US Treasury yields popping higher. Australian TD Securities inflation came in at 0.3% MoM, better than the previous, and at 1.4% YoY, slightly below the 1.5% from November.

This Tuesday, the focus shifts to China, as the country will release its December trade data. The Trade Balance in dollar terms is expected to post a surplus of $48B, while imports are seen rising by 9.6% and exports by 3.2%, both much better than the previous readings. Australia won’t release macroeconomic data.

The AUD/USD pair is just below the 61.8% retracement of its latest bullish tun, unable to clear the Fibonacci resistance. In the short-term, and according to the 4-hour chart, the pair is neutral-to-bullish, as it’s confined between directionless moving averages while technical indicators eased from intraday highs, holding within positive levels but gaining downward traction. The pair would further lose its upward potential on a break below 0.6885, the immediate support.

Support levels: 0.6885 0.6840 0.6800

Resistance levels: 0.6915 0.6950 0.6990

GOLD

On the first day of the trading week, Gold gave away its gains made on Friday supported by worse than expected US NFP data set. The positive mood is caused by the US who said to lift China’s currency manipulator tag ahead of the trade deal which will be signed next Wednesday. However, the phase-two deal might be more challenging as subjects like intellectual property will be harder to resolve. Also, the tension in the middle-east is slowly fading away after the serious events happened two weeks ago. 

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 retraced back on Monday with the risk-on sentiment dominated the markets along with news about the US lifting China’s currency manipulator tag. On the other hand, according to the CoT (Commitment of Traders) weekly report, bias has dropped 2% on an increase in short positions by 5,389 larger than the increase in long positions by only 2,914 lots. On the long run, the risk sentiment will be formed by the tensions in the middle-east and developments regarding the trade deal alongside the macroeconomic data set in the US.

Silver was trying to defend 18.00$ level at the time of the writing after giving away the majority of the gains made on Friday. Below the 17.60$ level, which is the %38.20 level 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 slid below 59.00$ level on Monday on the sixth consecutive day of decline hitting lowest level of 2020 so far. As the tension seems to ease in the middle-east, oil prices are sliding down although the production cut schema by the OPEC+ is intact and expectations of a possible economic activity growth alongside the trade deal which should support the oil demand. On the other hand, as the oil prices are sliding down, Saudi Aramco gave away ⅔ of its IPO gains already as its shares are sliding down too.

As long as WTI holds over 58.00$ level, 58.63$ (63.33$-51.03$ %61.80), 59.64$ (76.88$-42.40$ %50.00) and 60.00$ levels can be followed as topside targets. Below the 57.13$ (63.33$-51.03$ %50.00), the supports can be located at 55.73$ (63.33$-51.03$ %38.20) and 53.93$ (63.33$-51.03$ %23.60).

Support Levels: 57.13$ 55.73$ 53.93$

Resistance Levels: 58.63$ 59.64$ 60.00$

DOW JONES

After the decline which supported by the worse than expected NFP data on Friday, Wall Street is trying to pick up momentum for further upside with the improved risk sentiment. The US said to lift China’s currency manipulator tag ahead of the trade deal which will be signed next Wednesday supported the risk-on mood on Monday pushing the indexes up. Also, the US Treasury Secretary Mnuchin over the weekend said that phase-two trade talks, which will include more challenging intellectual properties topics will start soon.

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

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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