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Daily Market Report
10 Feb 2020

EURUSD

The American dollar continued to appreciate heading into the weekend, settling against the common currency at levels last seen in October 2019. The EUR/USD pair closed the week below 1.0950, despite a mixed US employment report that failed to impress. The Nonfarm Payroll report showed that the US economy added 225K new jobs in January, while the unemployment rate ticked higher, to 3.6%. The labour force participation rate increased to 63.4%, its highest level since June 2013, while average hourly earnings advanced a modest 0.2% MoM and by 3.1% YoY.

The greenback strengthened as the market’s sentiment soured, amid persistent concerns about how the coronavirus outbreak will affect the global economy. Wall Street closed in the red, while US Treasury yields trimmed most of their weekly gains.

This Monday, the EU will release its February Sentix Investor Confidence, foreseen at 4 from 7.6 previously. The US won’t release relevant data, although a couple of Fed’s members are scheduled to offer different speeches.

The EUR/USD pair is trading a couple of pips above its yearly low of 1.0941, firmly bearish according to the daily chart. The 20 DMA in the mentioned time-frame is extending its slide below the larger ones, while technical indicators retain their bearish slopes near oversold readings. In the shorter term, and according to the 4-hour chart, the risk is also skewed to the downside, as the pair is developing below all of its moving averages, while technical indicators consolidate within oversold levels. The pair has room to extend its decline toward 1.0878, 2019 low, with a break below the level probably anticipating a steeper decline.

Support levels: 1.0910 1.0875 1.0840

Resistance levels: 1.0980 1.1020 1.1060

USDJPY

The USD/JPY pair finished the week with substantial gains at 109.75, although it closed Friday in the red, after failing to surpass the 110.00 critical figure. The pair was trapped at the end of the week between persistent dollar’s strength and demand for safety. After reaching fresh record highs, Wall Street edged sharply lower on Friday, while US Treasury yields also fell, settling near weekly lows, as coronavirus fears fueled safe-haven assets.

Japanese data was mixed, as Overall Household Spending plummeted 4.8% YoY in December. The preliminary estimate of the December Leading Index came in at 91.6, much better than the 90.8 expected, while the Coincident Index for the same period printed at 94.7, worse than the 95.9 expected.

This Monday, Japan will release December Trade Balance and Current Account, and the January Eco Watchers Survey on the current situation, foreseen improving to 47.1 from 45.4 in December.

The USD/JPY pair lacks momentum despite holding near a  multi-week high, as the daily chart shows that technical indicators have turned south, the Momentum within negative levels and the RSI in neutral territory. The pair bottomed at its 20 DMA, an immediate dynamic support level around 106.60. Shorter tern and according to the 4-hour chart, the pair is at a brink of turning bearish, as it is struggling around a bullish 20 SMA, while technical indicators extend their declines, the Momentum piercing its mid-line but the RSI at around 59.

 Support levels: 109.60 109.25 108.90

Resistance levels: 110.00 110.35 110.70

GBPUSD

The GBP/USD pair fell for a third consecutive day, to close the week at 1.2885, its lowest since last November. The Pound capitulated to dollar’s demand, in spite of UK data h giving encouraging signs. On Friday, a survey showed that the country’s retailers saw their sales jump to the highest level in six years last month, amid political stability following PM Johnson’s victory. However, the same report shows that the advance may be well due to liquidations amid high stock levels.

Meanwhile, Brexit woes continue to affect Sterling. The UK has officially abandoned the Union, but a deal on the future relationship is still to be done. The UK and the EU seem to be in opposed stances toward how future trade should be conducted, hence triggering concerns an agreement can’t be reached before December. The UK won’t release relevant data this Monday.

The GBP/USD pair is poised to extend its decline, as, in the daily chart, it is developing below a bearish 20 DMA while pressuring a bullish 100DMA. Technical indicators head firmly lower within negative levels, the RSI at its lowest since October. The 4-hour chart shows that the 20 SMA has accelerated its decline below the larger ones and far above the current level. The Momentum indicator bounced from its low, but the RSI keeps heading south, currently at 26. The pair may continue to fall, particularly on a break below 1.2820 a relevant static support level.   

Support levels: 1.2865 1.2820 1.2775

Resistance levels: 1.2920 1.2970 1.3010

AUDUSD

The AUD/USD pair fell to 0.6661 on Friday, its lowest since 2009, to close the week a few pips above this last. The RBA released the Minutes of the latest monetary policy meeting, and the key takeaway was that the central bank is in no rush to cut rates further. Nevertheless, a rate hike is also out of the table, as economic growth has been downwardly revised to 1.9% for the year to June, from a previous estimate of 2.6%. Policymakers believe that growth would accelerate to 2.7% by the end of this year.

Attention will shift to China at the beginning of the week, not only because of the coronavirus outbreak but also because the country will release January inflation figures and money data. The annual CPI is foreseen at 4.9% as the monthly inflation is expected to have increased by 0.8%. Australia won’t release macroeconomic data this Monday.

The daily chart for the AUD/USD pair shows that technical indicators resumed their declines after correcting extreme oversold conditions, while the pair develops far below all of its moving averages, which support a bearish continuation. In the 4-hour chart, technical indicators settled near oversold levels, while the pair accelerated south after failing to surpass its 20 SMA, all of which supports a bearish continuation in the upcoming sessions.

Support levels: 0.6660 0.6630  0.6600

Resistance levels: 0.6700 0.6740 0.6770

GOLD

Gold posted gains on its third consecutive day of trading on Friday while the relief rally seems to lose power. While Wall Street retraced back despite better than expected labour market data set, the USD index DXY posted gains heading into 99.00 level. The US Bureau of Labor Statistics on Friday reported that Nonfarm Payrolls in January rose by 225,000 to beat the market expectation of 160,000. On the data front, after the inflation data set on early Monday, this week the markets will be following FED’s Powell’s testimony on both Tuesday and Wednesday. Also, on Thursday the CPI data set will be monitored as Powell strongly stressed the importance of the inflation results to determine the monetary policy for the future. The developments regarding the Coronavirus are also being monitored by the markets as the death toll kept rising surpassing SARS casualties back in 2002-2003.

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

Silver had a different agenda on Friday trading still under heavy pressure due to coronavirus developments. Fears of the manufacturing slowdown in China is expected to lower the demand for Silver for its industrial use. Therefore, Silver cannot benefit the risk aversion rallies seen for safe havens. While Gold found demand on Friday, Silver retraced back and stayed below 18.00$.

Silver stayed between its upper consolidation zone. Despite the decline, the white metal managed to stay over its critical support located at 17.60$ level.

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’s effort to gain ground after literally being hammered in whole January and the first week of February was short-lived and the black gold slid below 51.00$ on Friday giving back its limited gains. Oil is under heavy pressure as the coronavirus outbreak in China is pressuring the demand in China due to countermeasures taken. The market players fear that the virus outbreak might last longer than expected and therefore the manufacturing sector might slowdown lowering the demand for energy. However, the US officials stated that they did not see any problem with the supply chain up to now and also US Energy Secretary Brouillette noted that the impact of coronavirus on energy markets was "currently marginal." OPEX+ had an emergency meeting last week to discuss further production cuts to balance the oil prices. OPEC+ panel proposed 600,000 barrels per day (bpd) oil output cut, the same will start immediately and continue until June if agreed by all members. Following this, Russia’s Foreign Minister Sergei Lavrov said that they back the OPEC+ recommendation to deepen output cuts. Later, Russian Energy Minister Alexander Novak stated via Reuters, noting that they will announce their decision on OPEC and its allies’ (OPEC+) proposal to extend or deepen the global oil supply cuts this week. The baker Hughes US Oil rig count came almost in line with expectations with 676 vs 675.

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 faced heavy selling pressure on Friday although better than expected NFP results. While the optimism surrounding the markets fade away after refreshing its all-time high with a tick last week. While the US yields slid lower, the USD index managed to keep its incline through 99.00 level. This week the markets will follow FED’s Powell’s testimonies on Tuesday and Wednesday and later on Thursday the focus will be on the US inflation data set which was highlighted by Powell numerous times before to set the course for the monetary policy. 

Risk aversion before the weekend and profit-taking pushed Wall Street back on Friday. 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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