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Daily Market Report
07 Feb 2020

EURUSD

The EUR/USD pair has fallen to 1.0964 this Thursday, a level that was last seen in October 2019. The dollar has continued to strengthen against most major rivals on the back of local equities, with US indexes reaching all-time highs. The shared currency, in the meantime, suffered from another batch of disappointing data, as German Factory  Orders fell in December by 2.1% MoM and by 8.7% YoY, much worse than anticipated.

The dollar rallied despite mixed US employment-related data, as Challenger Job Cuts in January were up to 67.735K, quite a disappointment. However, Initial Jobless Claims for the week ended January 31 decreased to 202K, much better than the 215K anticipated. Nonfarm Productivity in Q4 increased by 1.4%, while the Unit Labor Cost in the same period rose by 1.4%, down from 2.5% in the previous quarter.

The figures are relevant ahead of the Nonfarm Payroll report to be out this Friday. The US economy is expected to have added 160K new jobs in January, while the unemployment rate is foreseen stable at 3.5%. Average hourly earnings are expected to have bounced, forecasted to result at 0.3% MoM and 3.0% YoY.

The EUR/USD pair is developing near the mentioned low, heading into the Asian session with a firmly bearish tone, although oversold. The 4-hour chart shows that technical indicators turned south within oversold levels, while the price develops well below all of its moving averages, supporting additional declines. A corrective recovery could take place should the pair recover above 1.1020, quite unlikely at the time being. Below 1.0950, on the other hand, the pair has room to retest 2019 low at 1.0878.

Support levels: 1.0950 1.0910 1.0875

Resistance levels: 1.1020 1.1060 1.1100

USDJPY

The USD/JPY pair trades a few pips below the 110.00 figure, having pressured the critical figure throughout the day. The pair is up for a fourth consecutive day, following the lead of US indexes, these last boosted by robust US data. Fears of a US recession eased after the latest macroeconomic reports, leading to advances also among  Treasury yields, which saw little action this Thursday.

Japan has a busy calendar this Friday, as it will release December Labor Cash Earnings and Overall Household Spending. Later in the day, it will unveil the preliminary estimates of the Coincident Index and Leading Economic Index, both for December.  The pair may remain in consolidative mode throughout the Asian session, ahead of US employment data.

The USD/JPY pair offers a neutral-to-bullish stance in its 4-hour chart, as it has retained ground above all of its moving averages, with the 20 SMA crossing above the larger ones. Technical indicators lack upward strength, with the RSI flat in overbought territory and the Momentum losing strength upward, but still holding well into positive levels.

 Support levels: 109.80 109.40 109.00

Resistance levels: 110.00 110.35 110.70

GBPUSD

The GBP/USD pair has fallen for a second consecutive week, trading at the time being near a fresh 2020 low established at 1.2921. As most major pairs, GBP/USD spent the first half of the day in consolidative mode, hovering the 1.3000 level, with the decline accelerating after Wall Street’s opening amid renewed dollar’s demand.  Meanwhile, the market’s main concern is the UK’s ability to clinch a deal with the EU before year-end.

The UK didn’t release relevant data, although a report from the National Institute of Economic and Social Research took its toll on Sterling. The NIESR stated that there is only about 20% probability of the UK economic growth doubling its pace of expansion, in the face of the country’s chronic run of poor productivity.

The GBP/USD pair is hovering around 1.2930 by the end of the day, firmly bearish according to the 4-hour chart. The pair has accelerated its slump below all of its moving averages, with the 20 SMA heading firmly south below the larger ones. The Momentum indicator has retreated sharply after testing its mid-line, while the RSI is currently at around 31, all compatible with additional slides, particularly if the pair loses the 1.2900 figure.

Support levels: 1.2900 1.2865 1.2820

Resistance levels: 1.2970 1.3010 1.3050 

AUDUSD

The AUD/USD pair ends Thursday with modest loses in the 0.6730 price zone, having spent the day within Wednesday’s range. Australian data released at the beginning of the day limited Aussie’s bullish potential, as the December Trade Balance printed at 5223M missing the market’s expectation of 5950M. Furthermore, Retail Sales fell by 0.5% in December, worse than the -0.2% anticipated.  During the following sessions, the pair was trapped between the dollar’s strength and rallying equities.

Friday will start with the release of the January AIG Performance of Services Index, previously at 48.7, and a speech from RBA’s Governor Lowe. Also, the central bank will release its Monetary Policy Statement. In the meantime, China will release its January Trade Balance, foreseen posting a surplus of $38.64B. In dollar terms, imports are seen down by 6.0% while exports are seen declining by 4.8%.

 The AUD/USD pair is showing an increased bearish potential in its 4-hour chart, as it’s pressuring a bullish 20 SMA, while below the larger ones which continue to head south. Technical indicators have eased sharply, approaching their midlines but still within positive levels. Below 0.6700, the pair is set to retest a multi-year low at 0.6670 while below this last, a steeper decline could be expected.

Support levels: 0.6700 0.6670 0.6630  

Resistance levels: 0.6770 0.6800 0.6840

GOLD

Markets continue to trade with mixed risk sentiment as both safe havens and risk assets are still on the incline at the same time. Gold managed to protect its ground over the 1.550$ while Wall Street also was trading with gains. China said it would slash tariffs on $75 billion of US imports in half as part of its efforts to implement a recently signed trade agreement with Washington starting from February 14th. China will cut tariffs on some US goods to 5% from 10%, while levies on some other items will be reduced to 2.5% from 5%, China’s Ministry of Finance said Thursday. While the equity markets are cheering about the news with cautious gains, Gold is benefiting the expectation of a low-interest environment for a longer period in the US. On the other hand, markets seem to ease the fears about coronavirus developments. However, W.H.O. reported about 3,700 new cases on Wednesday, a slight dip from the figure reported on Tuesday. Despite the decline, “it’s right now too early to make predictions” about the course of the epidemic, said Dr Michael Ryan, executive director of W.H.O.’s Health Emergencies Program. Therefore, as the upcoming economic activity figures from China will decline for sure due to slowdown of the economic activity due to virus outbreak, Gold finds demand at the same time with cautious-bullish tone seen on the equity markets. Next-up the NFP data set in the USD might cause a move in the USD which also might have an effect on Gold trade.

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

As China announced that they will slash the tariffs on $75 billion of US imports, Silver was boosted on Thursday trade supported by the possible increase in manufacturing-related demand in China in the future. Also, the traders are more likely to price a positive resolution regarding the virus outbreak. However, the move did not help the white metal to test 18.00$ barrier. On the other hand, while the retail traders decrease their long positions in both Gold and Silver, institutional traders remain heavily long.

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 is set to consolidate around 51.00$ level after the heavy plunge seen almost in the whole of January. The black gold failed to hold over 52.00$ on Thursday trading although the risk sentiment is getting better. Hopes of a bigger production cut from the OPEC+ was short-lived as Russia stated that they need more time in order to assess the likeliness of deeper cuts after the 3-day emergency meeting finished in Vienna earlier on Thursday. Also, the EIA reported on Wednesday a nearly 3.4 million barrel build in US crude oil supplies during last week. These figures add to the API’s reported build of almost 4.2 million barrel late on Tuesday which also pressured WTI.

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

Support Levels: 50.00 46.96$ 44.66$

Resistance Levels: 51.03$ 52.00$ 53.00$


DOW JONES

Dow Jones inched it’s all-time high on Thursday as the markets are pricing a positive outcome about the deadly virus outbreak in China. US Treasury Secretary Mnuchin said that they haven't seen any major problems with regards to supply chains amid the coronavirus outbreak and added that they expect China to fulfil its trade commitments. Also, China announced that they will slash the tariffs on $75 billion of US imports starting from February 14th. On the other hand, the US Senate acquitted Trump on both articles of impeachment which was already priced and stayed as a non-event. The positive mood is also considered as cautious as the momentum seems to be slowing and also safe havens like Gold is gaining traction alongside Wall Street at the same time. On Friday all the attention will be on the NFP data set as usual while the USD index DXY is keeping its move up around mid-98.00 levels.   

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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