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Daily Market Report
05 Feb 2020

EURUSD

The greenback has maintained its positive tone this Tuesday, ending the day with a firmer tone. The EUR/USD pair reached a fresh weekly low of 1.1032, as the American currency was underpinned by rallying equities, still driven higher by the solid US ISM Manufacturing PMI published on Monday. The market put temporarily aside coronavirus-related concerns, although the outbreak continues.

European data failed to impress, as Industrial Producer Prices remained stable monthly basis, and unchanged at -0.7% YoY in December. In the US, the January ISM-NY Business Conditions Index came in at 45.8, better than the previous at 39.1, while December Factory Orders beat expectations by rising 1.8%, improving from -0.7% in November.

Markit will publish the Services PMI and Composite PMI for the EU and the US this Wednesday. Most figures are expected unchanged from preliminary estimates. Also, the US will publish the ISM Non-Manufacturing PMI, seen at 58 in January from 54.9 in December, and the ADP survey on private jobs’ creation, foreseen at 156K vs the previous 202K.

The EUR/USD pair is trading just above the mentioned daily low, which stands around the 23.6% retracement of the latest daily slump. The recovery seen late last week pared just below the 61.8% retracement of the same decline at around 1.1105, which suggest that the pair may well resume its decline toward fresh lows. In the 4-hour chart, the pair is below all of its moving averages, while technical indicators keep easing but without enough strength and around neutral readings. The risk is skewed to the downside, but the pair would need to break below 1.1020 to increase its bearish potential.

Support levels: 1.1020 1.0980 1.0950  

Resistance levels: 1.1070 1.1105 1.1150

USDJPY

Rallying equities have helped the USD/JPY to advance to a fresh 2-week high of 109.51, holding on to gains by the end of the day. The market put aside concerns about a spreading coronavirus spreading economic disruption, and instead focused in solid US data. American indexes were sharply up, with the DJIA adding near 500 points in the day. Treasury yields also recovered, with the yield on the benchmark 10-year note settling not far from its weekly high of 1.62%.

Japan released at the beginning of the day the Monetary Base, which increased in January by 2.9% YoY, missing the market’s expectations of 3.1%. Early Wednesday, the Japanese macroeconomic calendar will be quite scarce, as the only notable event will a speech from a BOJ’s member. Given the optimistic stance of equities, it seems likely that the pair retains its bullish stance.

The USD/JPY pair is technically bullish after recovering the 109.00 mark, and as it finishes the US session near daily highs. In the 4-hour chart, the pair met sellers around its 100 SMA, but stands above the 20 and 200 SMA, while technical indicators hold on to daily highs, partially losing their positive momentum amid decreasing volumes.

Support levels: 109.15 108.90 108.65  

Resistance levels: 109.50 109.90 110.30

GBPUSD

The GBP/USD pair extended its slump to 1.2940 during London trading hours, but bounced roughly 100 pips, following encouraging UK data. The Sterling was under selling pressure amid mounting concerns the EU and the UK won’t be able to reach a deal before year-end. The UK currency then recovered with the release of the Markit Construction PMI, which improved to 48.4 in January from 44.4 in December. According to the official report, “data pointed to a much slower decline in UK construction output than that seen at the end of 2019.” The pair held on to gains despite persistent dollar’s demand.

Better than expected UK data temporarily overshadowed Brexit concerns, although these last are expected to continue to undermine Pound in the upcoming months. Data-related rallies will likely be short-lived. The Markit Services PMI for January, to be out this Wednesday, is foreseen unchanged from the preliminary estimate at 52.9.

The GBP/USD pair has settled around 1.3040 at the end of the American session, unable to revert its bearish short-term stance, as the intraday advance stalled below a Fibonacci resistance level at around 1.3050. Furthermore, the 4-hour chart shows that it remained below all of its moving averages, while technical indicators remained within negative levels throughout the day.

Support levels: 1.3010 1.2980 1.2945  

Resistance levels: 1.3050 1.3090 1.3125

AUDUSD

The AUD/USD pair ended the day with modest gains in the 0.6730 price zone, as the RBA brought some relief to the Aussie. The central bank kept rates unchanged at 0.75% as expected, as policymakers maintain an upbeat outlook on the domestic economy. The RBA left its growth forecasts unchanged for this year and the next, at 2.75% and 3.0% respectively. Furthermore, Lowe & Co. has said that “there have been signs that the slowdown in global growth that started in 2018 is coming to an end."

Governor Lowe is scheduled to deliver a speech titled "The Year Ahead" at the National Press Club, in Sydney, during the upcoming Asian session. Also, the country will release the Commonwealth Bank Services PMI for January and the Commonwealth Bank Composite PMI for the same month, both seen unchanged from their previous estimates. China will release the Caixin Services PMI for January, foreseen at 52.6 from 52.5 previously.

The AUD/USD pair’s advance seems corrective so far, as the pair has been under strong selling pressure for five weeks in-a-row. The advance was barely enough for daily indicators lo leave oversold territory. In the shorter term, and according to the 4-hour chart, the bullish potential is limited, as the pair is above its 20 SMA, which lacks directional strength, while technical indicators have lost bullish strength, although near daily highs. The pair would need to surpass 0.6770, a strong static resistance level, to attract more buyers and be able to extend its gains.

Support levels: 0.6700 0.6670 0.6630  

Resistance levels: 0.6770 0.6800 0.6840

GOLD

Gold smashed on Tuesday as the risk sentiment kept its positive mood with a daily drop of 30$. While Wall Street posted gains, the US yields pushed higher with the USD index DXY tested 98 zone. The USD index was supported by the better than expected factory data in the US. Also, the investors seem like pricing for a positive resolution regarding the virus outbreak in China although the death-toll keeps rising. China’s central bank lowered the interest rates on reverse purchase agreements by 10 basis points on Monday which also supported the buying frenzy on the equity markets.

Gold tested 1.550$ level during the day with a daily decline of %1.60. 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. 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.  

Support Levels: 1.557$ 1.530$ 1.514$

Resistance Levels: 1.600$ 1.615$ 1.650$


SILVER

Silver had a more balanced decline compared to Gold thanks to its industrial needs. While Silver is considered as a precious metal, on the other hand, its thermo-electro conductivity, sensitivity to light and malleability it has a certain demand for industrial applications. Therefore the Silver trade is usually balanced compared to Gold in both ways. Silver tested mid-17.00$ on Tuesday trading while the decline was limited compared to Gold. 

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$-19.65$). If Silver stays over 18.00$ it 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 had a spike over 51.00$ level on Tuesday trading however the attempt did not live long and the price sank below 50.00$. OPEC+ will have an emergency meeting on Wednesday to discuss further production cuts to fight with the sinking energy prices while the deadly virus outbreak will definitely affect the manufacturing sector in China and the demand for energy will decline until the issue is solved. 

If WTI stays below 50.00$ level, the support levels can be followed at 46.96$ and 44.66$ levels. Over the 50.00$ level, the upside targets can be followed at 51.03$ (October 2019 low) and 53.00$ levels.

Support Levels: 46.96$ 44.66$ 44.47$

Resistance Levels: 50.00$ 51.03$ 53.00$


DOW JONES

Dow Jones started the day with a bullish gap supported by the positive risk sentiment and Chinese central bank's surprise monetary policy move. China’s central bank lowered the interest rates on reverse purchase agreements by 10 basis points to fight against the selling pressure caused by the deadly virus outbreak. Also, the factory orders data exceeded the expectations supporting the positive sentiment in the market despite the fears of a global pandemic. The CBOE Volatility Index, Wall Street's fear gauge, was down nearly 10% as a result of the risk appetite. 

From the technical point of view, if the index stays over 29.000, 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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