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Daily Market Report
11 Feb 2020

EURUSD

The week has started as usual in slow motion, with the market still focused on the Chinese coronavirus outbreak and how it could affect global economic growth. The EUR/USD pair extended its decline to a fresh 2020 low of 1.0910, ending the American session not far above the level. The macroeconomic calendar had little to offer, as the US didn’t release relevant data, while the EU published the February Sentix Confidence Index, which came in at 5.2, surpassing the expected 4, although below the previous 7.6.

This Tuesday, attention will shift to US Federal Reserve Chief Powell’s testimony before the Congress. His prepared remarks will be published ahead of the event, although Powell will be submitted to an extensive Q&A after reading his comments. The European Commission will release Economic Growth Forecast earlier in the day, which may add pressure on the shared currency.

The Euro was among the worst performers this Monday, and despite oversold, it still has room to extend its slide against the greenback. The 4-hour chart for the pair shows that it continued to fall below bearish moving averages, with the 20 SMA currently at around 1.0970. Technical indicators consolidate within oversold levels, but with no signs of bearish exhaustion. The pair has fallen for six consecutive days, which means the risk of a corrective movement is high. Nevertheless, the dominant trend is to the downside, with a break below 1.0878, 2019 low, probably triggering stops and fueling the slump.

Support levels: 1.0910 1.0875 1.0840

Resistance levels: 1.0980 1.1020 1.1060

USDJPY

The USD/JPY pair has spent the first trading day of the week hovering around 109.70, where it left on Friday.  It posted a lower low and a lower high daily basis, reflecting lingering concerns about the coronavirus outbreak.  Equities closed in the red in Asia and Europe, although US indexes posted modest intraday advances. Government debt yields eased, as investors remain cautious and willing to run into safety.

The Japanese macroeconomic calendar included the January Eco Watchers Survey on the current situation, which came in at 41.9, beating the market’s expectations, although the survey on the outlook deteriorated to 41.8. The December Trade Balance printed a surplus of ¥120.7B, recovering from a ¥-2.5B in the previous month, although the Current Account surplus contracted to ¥524B. The country will release January Machine Tool Orders this Tuesday, previously at -33.6%.

The USD/JPY pair offered a neutral-to-bearish stance throughout the day, now heading into the Asian session with the same tone. The 4-hour chart shows that a flat 20 SMA capped the upside, although the pair held above directionless 100 and 200 SMA. The Momentum indicator has entered negative territory but lacks directional strength while the RSI is flat at around 53. The bearish case could become clearer on a break below 109.40, the immediate support, with the market then targeting the 108.65 region.

Support levels: 109.40 109.00 108.65

Resistance levels: 110.00 110.35 110.70

GBPUSD

The GBP/USD pair traded as high as 1.2945 after the pair traded as low as 1.2871 at the beginning of the day, a fresh 2020 low. The Pound remains torn between robust local data and Brexit-related concerns. UK PM Johnson said that the kingdom would walk away without a trade agreement if the EU does not agree to a Canada-style deal, something Brussels is unwilling to offer. Meanwhile,  UK Foreign Secretary Dominic Raab is working other fronts. This Monday, he said that he is confident of achieving a trade deal with the US in wave one.

The UK has a packed macroeconomic calendar this Tuesday, starting with the release of the January BRC Like-for-Like Retail Sales survey during the upcoming Asian session, foreseen at -1% from 1.7% previously. Later in the day, the country will publish December Trade Balance and Industrial Production for the same month. It will also unveil a preliminary estimate of Q4 GDP foreseen at 0.% from 0.4% previously. Upbeat figures could push the pair temporarily higher, but it’s unlikely such positive momentum would last long.

The GBP/USD pair is trading in the 1.2910 price zone at the end of the American session, and the 4-hour chart shows that the early advance was rejected by sellers aligned at around a bearish 20 SMA, while technical indicators have stabilized within negative levels after correcting oversold readings. The pair would likely extend its decline to fresh lows on a break below the 1.2900 figure, the immediate support.

Support levels: 1.2900 1.2865 1.2820  

Resistance levels: 1.2945 1.2990 1.3030

AUDUSD

The AUD/USD pair rose during Asian trading hours to 0.6706 but trimmed all of its intraday gains to settle around 0.6675 later in the day. The early advance was backed by better-than-expected Chinese inflation data as the January CPI was up by 1.4% MoM and by 5.4% YoY. However, the sour sentiment that kept equities in the red limited the upside potential for the pair. Renewed demand for the greenback sent it back lower during the last trading session of the day.

During the early Asian session, Australia will release December Home Loans, seen up by 0.7%. The country will also unveil the NAB’s Business Confidence Index, see at 0 in January from -2 previously, and the NAB’s Business Conditions Index for the same month, seen at 4 from 3 in December. China will publish January New Loans and M2 Money Supply.

The AUD/USD pair is hovering near its recent multi-year low at 0.6661, bearish in the short-term. The 4-hour chart shows that the intraday advance stalled well below a bearish 20 SMA, while the larger ones retain their downward slopes above the current levels. Technical indicators resumed their declines after correcting oversold conditions, now again near oversold territory. The pair would likely near the 0.6600 figure on a break below the mentioned multi-year low.

Support levels: 0.6660 0.6630  0.6600

Resistance levels: 0.6700 0.6740 0.6770

GOLD

Monday trading was quiet as the coronavirus headlines started to become routine although the outbreak surpassed the death toll of SARS with 910 casualties. While Wall Street had a limited positive and cautious tone and the USD index testing 99 level, Gold managed to keep its move up for the fourth consecutive day of trading. On the data front, China’s January month CPI registered the fastest pace of increase while rising well beyond a 4.9% forecast to 5.4% on YoY. The monthly figures also crossed 0.8% market consensus with 1.4% mark whereas PPI matched 0.1% expected versus -0.5% prior. Also, The People's Bank of China (PBOC) conducted repo operations worth 900 billion yuan on Monday. The central bank injected 700 billion yuan seven-day reverse repos at an interest rate of 2.4% and pumped 200 billion yuan through 14-day reverse repos at an interest rate of 2.55% as a supportive countermeasure against the economic activity slowdown caused by the virus outbreak.

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 tried to erase its gains made on last Friday although Gold trading was seen positive. Markets started the price the better scenario regarding the resolution of the virus outbreak in China as the riskier assets are doing their best at least to protect their higher grounds. On the other hand, although Gold trading seems more certain, Silver seems undecisive keeping its trading range intact.

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 hammered again on Monday trading sliding below the %50.00$ level with the fears of a decline in the demand and oversupply issues. The black gold lost around %25 since the start of 2020 falling from its January peak at 66.00$. It is still not clear that the OPEC+ will limit the production while the hope of a deeper cut is holding Oil for further declines. The stock markets are pricing a quick resolution to virus outbreak in China, oil traders fears of a much wider decline in the demand.

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: 46.96$ 44.66$ 44.47$

Resistance Levels: 51.03$ 52.00$ 53.00$


DOW JONES

Dow Jones is trying its best to keep its ground although the world is facing the deadly virus outbreak which it’s death toll has already surpassed SARS epidemic. The markets are digesting the better than expected US NFP data set on Monday while the virus outbreak seems like pressuring the markets less and less in time. Also, strong Q4 earnings is another factor limiting further declines. FED’s Powell will have his testimony on Tuesday and Wednesday followed by the US inflation set on Thursday.

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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