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Daily Market Report
30 Jan 2020

EURUSD

The EUR/USD pair has remained under selling pressure, falling to a fresh 2020 low of 1.0991 ahead of the event of the day, the Fed’s monetary policy announcement. As expected, the US Central Bank has left its main rate unchanged at 1.5%-1.75%, while the accompanying statement was pretty much a copy of that of December, triggering no market’s reaction. Powell’s speech didn’t provide additional clues that could trigger some market’s action, with the dollar easing just modestly with his speech.

Ahead of the Fed  Germany published the  GFK Consumer Confidence Survey, which improved to 9.9 in February, surpassing the market’s expectations of 9.6. The US has just published the preliminary estimate of December Wholesale Inventories, which came in at -0.1%, and the Goods Trade Balance for the same month with the deficit widening to $68.33B from $62.99, slightly better than expected. Pending Home sales fell by 4.9% in December, missing the market’s expectation of a 0.5% advance.

This Thursday, the EU will release the January Economic Sentiment Indicator, foreseen at 101.8 from 101.5 previously. Germany will publish the preliminary estimates of January inflation, foreseen at 1.7% YoY, while the US will publish the first estimate of Q4 GDP, foreseen at 2.1%. The market will likely wait for this last before compromising with a certain USD position.

The EUR/USD pair is trading at around 1.1010, retaining its negative technical stance in the short-term. The 4-hour chart shows that it continues to develop below all of its moving averages, with the 20 SMA providing intraday resistance. The Momentum indicator has retreated from near its mid-line, heading south, while the RSI continues to consolidate around 30, all supportive of additional declines once the pair breaks below 1.0980, the immediate support.

Support levels: 1.0980 1.0950 1.0910

Resistance levels: 1.1030 1.1065 1.1100  

USDJPY

The Japanese yen retained its weak tone, trading near its recent lows against the greenback. The USD/JPY pair showed little reaction to the positive tone of equities, rather following the behaviour of US Treasury yields, which held lifeless around their Tuesday close ahead of the US Federal Reserve announcement.  Fed’s Chief Powell offered a balanced speech, avoiding to provide too many details that could alter financial markets.

Japan published at the beginning of the day January Consumer Confidence, which remained unchanged at 39.1 against the expected 40.8. Also, the Bank of Japan released the summary of opinions for its January meeting, which showed that policymakers are still debating whether to continue or not with the current policy approach amid the prolonged low growth and low inflation. During the upcoming Asian session, Japan will publish minor data while BOJ’s Amamiya will offer a speech.

The USD/JPY pair has found intraday support around the 50% retracement of its January rally in the 108.90 area, the immediate support. The 4-hour chart shows that the pair briefly surpassed a bearish 20 SMA but returned below it, while technical indicators began to ease after entering positive territory, now heading south and reflecting the absence of buying interest. The pair would need to advance beyond 109.30, the 38.2% retracement of the mentioned rally, to be able to extend its recovery and approach the 110.00 figure.

Support levels: 108.90 108.65 108.20  

Resistance levels:  109.30 109.65 110.00

GBPUSD

The GBP/USD pair spent the day within familiar levels, stuck around 1.3000. The market shifted to cautious mode ahead of the US Federal Reserve announcement but in the case of Sterling, the quietness was exacerbated by upcoming UK news.

UK first-tier events will start this Thursday with the Bank of England monetary policy decision. The central bank is expected to keep rates on hold, although at least one more MPC is expected to vote in favor of a rate cut. However, there’s a good chance than more than one policymaker adding his voice to the current 2 members in favor of a cut. Governor Carney’s speech will be closely scrutinized afterward. Anyway, things don’t look good for the Pound, with Brexit scheduled for Friday.

The GBP/USD pair is ending the day little changed at around 1.3020, and the short-term technical picture indicates that the risk remains skewed to the downside, as the pair has spent the day below a Fibonacci level at 1.3040, the immediate resistance. In the 4-hour chart, the pair develops below all of its moving averages, and with the 20 SMA below the larger ones. Technical indicators have recovered from daily lows, but remain below their midlines. There are little chances that the pair will move ahead of BOE’s decision.

Support levels: 1.2970 1.2930 1.2895

Resistance levels: 1.3040 1.3085 1.3110  

AUDUSD

The AUD/USD pair peaked at 0.6776 during Asian trading hours, underpinned by better-than-expected Q4 Australian inflation, although as expected, the data fell short of changing the pair’s bearish trend. According to the official release, inflation was up by 0.7% QoQ and by 1.8% YoY. The RBA Trimmed Mean CPI resulted at 0.4% QoQ as expected, and at 1.6% when compared to a year earlier.  Despite the good local news and the positive tone of worldwide equities, the pair fell to a fresh 2020 low of 0.6734 ahead of the Fed, to later recover modestly.

This Thursday, the Asian macroeconomic calendar will be quite light, and Australia will only release Q4 quarterly imports and exports.

AUD/USD short-term technical outlookTrading at around 0.6760, the AUD/USD pair is still at risk of falling, as the 4-hour chart shows that it remains below firmly bearish 20 SMA, with the 20 SMA a few pips above the current level and the 100 SMA some 100 pips above it. Technical indicators have picked up but remain within negative levels, the Momentum approaching its midline and the RSI hovering near oversold readings. The main bearish target is 0.6670, where the pair posted a multi-year low last October.

Support levels: 0.6730 0.6700 0.6670

Resistance levels: 0.6770 0.6805 0.6840

GOLD

As FED delivered what is already known by the markets, Gold had a mixed reaction first retracing back and then erasing its losses. Fed kept rates unchanged (targets 1.5% to 1.75%) as expected while the market focus was more on the press conference. Powell stated that FED is not happy with the inflation level still hovering below %2 and ready to react when the timing is correct. On the other hand, Powell’s comments about the virus outbreak clearly stated that the economic activity in China will definitely a slowdown in 2020. As a result, both risk assets and safe havens made a profit from the event while Gold tested 1.580$ and also Wall Street tried to close this week’s bearish opening gap. Next, markets will follow the Q4 US GDP data.

The first resistance for Gold is still 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

After yesterday’s heavy plunge, Silver tried to erase some portion of its losses in the aftermath of FOMC. As the deadly virus outbreak in China will clearly cause an economic activity slowdown in China, fears of a decline in demand for Silver for its industrial purposes pressuring the white metal. As the general market reaction was positive for almost all assets after Powell’s press conference, Silver tried to re-gain mid 17.00$ on late Wednesday trading.

As 16.97$ (%50.0 14.29$-19.65$) still stands as critical support, below this level, a test of 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 failed to keep its gains as the deadly virus outbreak still creates a risk factor. Also, a higher than expected increase in inventories created extra pressure on WTI. US crude inventories rose by 3.5 million barrels last week, against expectations of an increase of 500K barrels. It was the largest build-up since early November. Powell also highlighted that the outbreak will create an economic slowdown in China, therefore the demand for energy will likely to decline.

WTI was trying to hold over 53.00$ level at the time of the writing as yesterday’s bounce was short-lived. 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

Dow Jones was trying to hold its ground on the positive zone as Powell’s speech was without any surprise. As FED kept its monetary policy intact, Powell addressed the inflation still being below %2 and stated that FED is ready to react when the timing is right. As an addition, Powell stated that the deadly virus outbreak in China will definitely create a slowdown in the economic activity. As the initial market reaction, Dow Jones tried to test 29.000 level but failed to break the resistance. Over the first half of this year, Fed plans to adjust the size of repo operations while expecting to continue offering repo support through April. The next risk event for Wall Street will be the US Q4 GDP figures which will be watched closely by the traders.

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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