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Daily Market Report
29 Jan 2020

EURUSD

The EUR/USD pair traded as low as 1.0997, ending Tuesday a few pips above the 1.1000 figure, as the dollar remained strong on the back of ruling cautious while getting an additional boost from local data. The US released December Durable Goods Orders, which rose by 2.4%, largely surpassing the 0.5% forecast. However, core readings were all in the red and worst than expected. The Non-defense Capital Goods Orders ex Aircraft fell by 0.9%, against a 0.% reading expected, partially overshadowing the positive headline.

Also, the CB Consumer Confidence Index increased in January to 131.6 following a moderate increase in December, “driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects."  

This Wednesday, the US Federal Reserve will announce its latest decision on monetary policy. Powell Co. are widely anticipated to maintain the status quo, while the central bank won’t publish an update on economic forecast. The key will be Powell’s speech and any hint he offers on the future of rates and the balance sheet. Germany will release earlier in the day the February GFK Survey, seen at 9.6 in February, unchanged from January.

The EUR/USD pair is trading a few pips above the 1.1000 figure, maintaining its bearish tone. The 4-hour chart shows that it keeps developing below a firmly bearish 20 SMA, currently around 1.1030. The RSI indicator remains directionless at oversold readings, but the Momentum indicator recovers from its intraday lows, drawing a principle of divergence and suggesting the pair may correct higher before reaching lower lows. A break below 1.0980 will deny the possibility of correction and result in the pair approaching the 1.0900 figure.

Support levels: 1.0980 1.0950 1.0910

Resistance levels: 1.1030 1.1065 1.1100  

USDJPY

The USD/JPY pair recovered some ground in the last trading session of the day, reaching a fresh weekly high of 109.19 and settling not far below this last. The dollar retained its dominant strength, while the Japanese currency eased on the back of an improved market mood. After Asian and European equities struggled around their opening levels, finishing the day mixed, Wall Street posted substantial gains, with the Dow up over 200 points. Government bond yields stated the day falling to fresh multi-week lows, although later recovered to close in the green. The yield on the benchmark 10-year Treasury note recovered from 1.57% to settle at around 1.64%.

Japan published this Tuesday the December Corporate Service Price Index, which came in at 2.1% YoY, matching the market’s forecast.  During the upcoming Asian session, the BOJ will release the Summary of Opinions, while later in the day, the country will publish the January Consumer Confidence Index, foreseen at 40.8 from the previous 39.1.

The USD/JPY pair s trading around 109.10, with further gains unclear at this point, as the 4-hour chart shows that sellers surged on a test of a bearish 20 SMA, which continues heading south below the larger ones. Technical indicators, in the meantime, have recovered from their daily lows, but lost strength upward well below their midlines. The pair would need to extend its recovery beyond 109.30, a Fibonacci resistance and where it left on Friday, to be able to continue advancing toward the 110.00 figure.

Support levels: 108.90 108.65 108.20  

Resistance levels: 109.30 109.75 110.05

GBPUSD

The GBP/USD pair lost the 1.3000 threshold during US trading hours, trading as low as 1.2974,  following the release of mostly encouraging US data. Looming BOE´s decision and Brexit are taking their tolls on Pound, combined with persistent demand for the American currency. The UK CBI Distributive Trade Survey on realized sales remained unchanged in January for a third consecutive month, missing the market’s expectation of 3.0% and adding to the sour tone of Sterling. This Wednesday, the UK will only publish minor housing-related data, irrelevant ahead of the mentioned first-tier events scheduled for Thursday and Friday respectively.

The GBP/USD pair recovered from the mentioned low and is currently hovering around the 1.3000 level, although with the risk clearly skewed to the downside according to the 4-hour chart, as the pair extended its decline below all of its moving averages. The 20 SMA is gaining downward strength between the larger ones, but they all remain confined to a tight range. Technical indicators in the meantime, have stabilized near their daily lows and well into negative territory, in line with additional slides.

Support levels: 1.2970 1.2930 1.2895

Resistance levels: 1.3040 1.3085 1.3110  

AUDUSD

Commodity-linked currencies continued to ease, with AUD/USD falling to 0.6736, to finish the day around 0.6750. The Aussie was undermined at the beginning of the day by persistent weakness among local equities, and the NAB’s Business Confidence Index for December, which resulted in -2 against the 1 expected. Business Conditions met the market’s expectations by printing 3. The pair stabilized during the American session, trapped between the dollar’s strength and the solid performance of Wall Street.

Australia will release  Q4 inflation estimates early Wednesday. Quarterly inflation is expected to have risen by 0.6%, slightly better than Q3 0.5%, while yearly basis,  the CPI is seen unchanged at 1.7%. The RBA Trimmed Mean estimates are seen at 0.4% QoQ and 1.5% YoY, this last down from 1.6%. A worse-than-expected report could exacerbate speculation of a rate cut next week, and send the pair nose-diving toward 0.6670, the multi-year low achieved in 2019.

The AUD/USD pair is stuck in a range but poised to extend its slide, according to technical readings in the 4-hour chart, giving no signs of downward exhaustion. The pair remains below a bearish 20 SMA which accelerated its decline in the mentioned time frame, while technical indicators stand pat near daily lows, lacking directional strength. The fact that it broke and met sellers on approaches to the 0.6770 level, add to the bearish case.

Support levels: 0.6730 0.6700 0.6670

Resistance levels: 0.6770 0.6805 0.6840

GOLD

Gold gave away its gains made yesterday and retraced back to 1.570$ zone as a result of better than expected US durable goods order data. The USD index DXY marked its highest level in almost two months before FED’s monetary policy meeting while the US 10-year Treasury yields rebounded from a near four-month low. However, the deadly virus outbreak in China is still supporting the flight to safety, therefore, Gold can find support until the issue is taken under control. As the tension in the middle-east seems like eased, the virus outbreak is the only risk event for the markets as resistance to further inclines which supports Gold trade.

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 hammered heavily on Tuesday trading as risk appetite returns to the market supported by the positive US durable goods data ahead of FED’s monetary policy meeting. At the time of the writing, Silver slashed almost %3.5 on a daily basis sliding to the mid-17.00$ zone. Like oil prices, Silver is also under pressure with its industrial demand as the virus outbreak in China is highly expected to slow down the manufacturing in the country.   

If Silver tests below the important 17.00$ level, the supports can be followed at 16.33$ (%61.8 14.29$-19.65$) and 15.55$ (%76.40 14.29$-19.65$) can be targeted. On the top side, the resistances are lined at 17.60$ (%38.20 14.29$-19.65$), 18.38$ (%23.6 14.29$-19.65$) and over that 18.70$.

Support Levels: 16.97$ 16.33$ 15.55$

Resistance Levels: 17.60$ 18.38$ 18.70$

 

CRUDE WTI

WTI finally found some light at the end of the tunnel and managed to re-gain 53.00$ level on Tuesday. Rumours that the probability of OPEC+ could extend the ongoing oil output cut agreement until June or even increase the reductions supported oil prices on Tuesday after six consecutive days of losses made mostly because of the deadly virus outbreak in China. Fears of the outbreak might slowdown the manufacturing and demand for energy pressured prices combined with oversupply concerns. Although OPEC+ had an agreement to cut the production, historic data shows the product reduction decisions are not always accurate.   

As long as WTIholds 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

After yesterday’s heavy sell-off, Wall Street picked up the pace on Tuesday trading trying to close the opening bearish gap made on Monday. Durable Goods Orders in the United States rose 2.4% on a monthly basis in December following November's decline of 3.1% (revised from 2%), the data published by the US Census Bureau showed on Tuesday. This reading came in better than the market expectation for an increase of 0.5%. As a result, the USD index DXY tried to test 98 resistance and CBOE Volatility Index dropped nearly 7% to reflect the risk-on atmosphere before FED’s two-day monetary policy meeting. Markets are not expecting a change in the monetary policy while the press conference will be watched closely.     

As long as the index stays over 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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