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Daily Market Report
28 Jan 2020

EURUSD

The FX board was all about risk aversion on Monday, amid a weekend report indicating that the Chinese Health Commission reported that the coronavirus transmission ability is getting stronger and that infections could continue to rise. The American dollar rose against most major rivals, with the exception of those considered safe-havens. The EUR/USD pair traded as low as 1.1009, now heading into the Asian session around 1.1015, down for a third consecutive trading day.

Adding pressure on the shared currency, the January IFO Survey showed that the German Business Climate deteriorated to 95.9 from 96.3 in January, against an expected bounce. The sub-components were down, also below the market’s forecast.  US figures were mixed, as December New Home Sales were down by 0.4% monthly basis, well below the 1.5% advance expected. The Dallas Fed Manufacturing Business Index for January, however, came in better than anticipated at -0.2.

This Tuesday, the US will publish December Durable Goods Orders, seen up by 0.5%. The core reading, Non-defense Capital Goods Orders ex Aircraft is seen flat after advancing 0.1% in the previous month.

The EUR/USD pair is technically bearish, as it keeps posting lower lows and lower highs daily basis. In the shorter term, and according to the 4-hour chart, the risk is also skewed to the downside given that the 20 SMA has extended its downward slope above the current level and below the larger ones, currently at around 1.1050. Technical indicators hold near oversold levels, the Momentum heading marginally lower and the RSI flat, with no signs of changing course. The immediate support is now 1.0980, the low from November 29. A break below this last should open doors for a continued decline toward 1.0878.

Support levels:  1.1020 1.0980 1.035

Resistance levels: 1.1065 1.1100 1.1140

USDJPY

The USD/JPY pair has settled at around 109.00, after trading as low as 108.72 at the beginning of the day. The Japanese currency appreciated on the back of risk aversion, triggered by news coming from China indicating that the coronavirus is getting stronger and could continue spreading. The pair recovered from the mentioned low amid the broad dollar’s demand, but risk-off sentiment maintained in the red for the day.

US Treasury yields, in the meantime, fell to their lowest since last October, with the yield on the benchmark 10-year note hitting 1.60%. Japan’s macroeconomic calendar has little to offer these days. The country didn’t release relevant data on Monday but will publish the December Corporate Service Price Index, seen unchanged at 2.1% YoY in December.

The USD/JPY pair has managed to end the day just above the 50% retracement of its January rally, measured between 107.64 and 110.28. Nevertheless, the risk remains skewed to the downside according to the 4-hour chart, as it remains below all of its moving averages, with the 20 SMA crossing below the larger ones. Technical indicators, in the meantime, have recovered from their lows within extreme oversold levels, but quickly lost strength and turned flat well below their midlines. The main support now is 108.65, the 61.8% retracement of the mentioned rally, with a break below it exposing the low of the range at 107.64.

Support levels: 108.90 108.65 108.20  

Resistance levels: 109.40 109.75 110.05

GBPUSD

The GBP/USD pair reached a daily high of 1.3105 but retreated from such level to close the day in the red a couple of pips above its daily low of 1.3039. Speculative interest started unwinding its Pound longs ahead of critical UK events that will take place later this week. The Bank of England is having it’s monetary policy meeting this Thursday, and there are 50-50 chances of a rate cut. Several MPC members have hinted that they would vote for a cut and there’s a good chance that Governor Carney may want to cut before leaving his seat. Also, Brexit will finally happen this Friday, after over three years of back and forth.

The UK released this Monday the BBA Mortgages Approvals, which rose in December to 46.815K. However, the numbers had no saying on the GBP. This Tuesday, the UK macroeconomic calendar will include the CBI Distributive Trade Survey on realized sales, seen up by 3.0% in January, better than the previous 0.0%.

The GBP/USD pair is trading around 1.3050, just above a Fibonacci support. The pair offers a neutral-to-bearish stance in its 4-hour chart, as its trading just below a congestion of directionless moving averages, while technical indicators head lower within negative levels. The pair has been meeting buyers in the 1.3040/50 price zone since last week, which means that it needs to clear that area to turn effectively bearish in the upcoming sessions, with the next relevant support at 1.2970.

Support levels: 1.3040 1.3000 1.2970

Resistance levels: 1.3085 1.3110 1.3150

AUDUSD

The AUD/USD pair collapsed, trading as low as 0.6751, a level that was last seen in October 2019. The pair is currently holding a few pips above this last, with the Aussie undermined by risk aversion. Australia celebrated a holiday at the beginning of the week, but that didn’t help the local currency, hurt by the fears related to the coronavirus outbreak,  still not under control. Worldwide equities closed in the red, adding pressure on the pair. During the upcoming session, the country will publish the December NAB’s Business Confidence Index, seen at 1 from 0 previously, and the NAB’s Business Conditions Index, seen at 3 from 4 in November.

The AUD/USD pair is oversold according to intraday charts, but there are no signs that it may change course in the upcoming sessions. The 4-hour chart shows that the pair is some 80 pips below a firmly bearish 20 SMA, while the 100 SMA has crossed below the 200 SMA above the shorter one. Furthermore, technical indicators stand within oversold levels, with the bearish momentum easing but still heading lower. The pair has now room to extend its decline toward 0.6670, a multi-year low set last 2019.

Support levels: 0.6750 0.6710 0.6670

Resistance levels: 0.6790 0.6820 0.6860

GOLD

Although the WHO (World Health Organisation) had a confronting tone about the virus outbreak from China, markets started to be more and more cautious about the incident. Gold is having its fourth consecutive positive trading day inching close to 1.600$ while Wall Street is retracing back as a result of a flight to safety. According to China’s Health Commission, the coronavirus transmission ability is getting stronger and that infections could continue to rise. Markets expect the contamination conditions in China will cause a slowdown in the economic activity at least for Q1, therefore, the recent bull run halted to see further developments regarding the outbreak.

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

On the first day of the trading week, Silver tested fresh three weeks high at 18.35$ however failed to hold its ground in positive territory and retraced back to 18.00$ level. While Gold is keeping its head up as the deadly virus outbreak in China started to weigh more on markets, Silver was reluctant to follow the same trend and kept its trading range between 18.38$ and 17.60$. Due to contamination conditions in China, it is feared that the economic activity might slow down as well as demand for industrial use precious metals like Silver. This expectation might hold Silver against the incline seen on Gold.

If Silver stays over 18.00$ it can test 18.38$ (%23.6 14.29$-19.65$) and 18.70$. On the other hand, below the 17.60$ 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$-19.65$). 

Support Levels: 17.60$ 16.97$ 16.33$

Resistance Levels: 18.38$ 19.00$ 19.64$


CRUDE WTI

WTI again hammered on the sixth consecutive day of decline along with the fears of the deadly virus outbreak in China. The black gold started the week with a bearish gap and tested levels just seen in October 2019 hitting as low as 52.18$. However, with immediate effect, some buyers kicked in and at the time of the writing, WTI was trying to regain 53.00$ level. Fear of a slowdown in the economy is pushing the energy prices down alongside oversupply concerns. Alongside China, Coronavirus has also been registered in 11 other countries, which have reported a total of 40 cases. Also, due to the CFTC report, net-long positions for WTI are down to five-week low at 520.6K contracts. 

As long as WTI stays below 53.00$ level, 52.00$ and 51.00$ levels can be targeted as new lows. Over the 53.00$ level, the resistances might be followed at 53.93$ (63.33$-51.03$ %23.60), 55.73$ (63.33$-51.03$ %38.20) and 57.13$ (63.33$-51.03$ %50.00).

Support Levels: 53.00$ 52.00$ 51.00$

Resistance Levels: 53.93$ 55.73$ 57.13$


DOW JONES

Dow Jones also started the trading week with a big bearish gap alongside growing fears of the deadly virus outbreak. Although the World Health Organisation’s confronting statements, some health experts estimate up to 100,000 people could be infected already with at least 81 are dead in China, and more than 2,700 are confirmed to be infected. Chinese health officials are warned that the deadly coronavirus could be much more contagious than initially thought, as infected patients can spread the flu-like illness before showing any symptoms as its incubation period is 14 days while being infectious. On the other hand, FED’s interest rate decision and the press conference will be closely monitored on Wednesday. Markets expect FED to maintain its cautious stance on hold while President Trump is pressuring the policymaker for lower, even negative rates.   

Although the strong bearish gap, the index found some buyers and tried to get away from its opening levels at the time of the writing. As long as the index stays below 29.000 level, 29.500 and 30.000 levels can be followed as new targets high while below the 28.400 level, 28.000 and 27.770 can be followed as supports.

Support Levels: 28.400 28.000 27.770

Resistance Levels: 29.500 30.000 30.500


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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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