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Daily Market Report
13 Feb 2020

EURUSD

The shared currency continued to suffer this Wednesday, falling against the greenback to a 1.0864, its lowest since May 2017. The dollar was generally weaker amid easing demand for safety, while the EUR got hit by dismal local data. According to the official report, Industrial Production in the Union fell in December by 2.1% monthly basis, and by 4.1% when compared to a year earlier.

US Federal Reserve Chair Powell testified before the Congress for a second consecutive day. Among other things, Powell said that the central bank stands ready to use QE “aggressively” in a downturn, although he added that he does not see anything to stop the current economic expansion, pouring some cold water on speculation about a dovish turn. The US published MBA Mortgage Applications for the week ended February 7, which were up by 1.1%, after advancing 5.0% in the previous week, and the JOLTS Job Openings for December, which declined to 6.423M.

Germany will release this Thursday its January inflation figures, seen unchanged from their preliminary estimates. The US will also publish January inflation, seen up by 2.4% when compared to a year earlier. Core annual CPI is foreseen at 2.2%, down from 2.3%.

The EUR/USD pair stands a few pips above the 1.0878 low set last year, the immediate support. After correcting extreme oversold conditions on Tuesday, the pair is poised to extend its decline. In the 4-hour chart, a bearish 20 SMA capped advances, currently providing resistance at around 1.0925 the weekly high. Technical indicators, in the meantime, retain their bearish slopes, with the RSI once again oversold territory. Large stops are suspected below the current level, and if those are triggered, the pair would likely accelerate its decline and approach the 1.0800 price zone. 

Support levels: 1.0875 1.0840 1.0810

Resistance levels: 1.0925 1.0965 1.1000

USDJPY

The USD/JPY pair peaked at 110.12 during London trading hours, a fresh February high, holding on to gains by the end of the day but showing no aims to extend its advance. The pair found support in a better market mood, as despite the coronavirus outbreak continued taking its deadly toll, markets seemed less concerned about it, hoping it would remain contained within China, and that the worst is now behind. Worldwide equities closed in the green, with US indexes flirting with all-time highs.

Japanese data released at the beginning of the day disappointed, as January Machine Tool Orders plummeted a 35.6%, after losing in December 33.6%, according to preliminary estimates. This Thursday, the country will publish the January Producer Price Index, seen unchanged monthly basis and up by 1.5% when compared to January 2019.

The USD/JPY pair heads into the Asian opening with a neutral-to-bullish according to the 4-hour chart, as it continues to develop above all of its moving averages, which anyway lack directional strength. Technical indicators hold within positive levels, but the Momentum is losing strength upward just above its mid-line, while the RSI stalled its advance just ahead of overbought levels. The pair would need to run pass 110.28, January high, to turn bullish and be able to extend its gains toward the 111.00 figure.

Support levels: 109.40 109.00 108.65

Resistance levels: 110.35 110.70 111.00

GBPUSD

The GBP/USD pair has advanced for a third consecutive day, although it remains below the 1.3000 threshold. As it happened ever since the week started, the pair’s advance has more to do with the broad dollar’s weakness than with a sudden interest for the Pound. In fact, the UK didn’t release macroeconomic data this Wednesday, while the Brexit front continued to provide negative news.  The European Parliament agreed that any deal must respect a “level playing field” by updating its rules to equal those of the Union. UK PM Johnson has ruled out the EU’s proposed “dynamic alignment” of  EU-UK laws.

The UK macroeconomic calendar will remain light for the rest of the week, and will only publish this Thursday the RICS Housing Price Balance for January seen up by 3.0% following a 2.0% decline in the previous month.

The GBP/USD pair offers a mildly bullish stance in the short term, although the suffered advance seen this week hardly supports further gains ahead. In the 4-hour chart, the pair has spent the day above its 20 SMA, which aims marginally higher at around 1.2930, but remains far below the larger ones. Technical indicators have eased from their highs but stabilized within positive levels, somehow indicating absent selling interest.  Nevertheless, chances of a continued advance seem limited amid mounting Brexit-related tensions.

Support levels: 1.2945 1.2900 1.2865  

Resistance levels: 1.3000 1.3030 1.3075

AUDUSD

Commodity-linked currencies were the best performers this Thursday, backed by renewed demand for high-yielding assets. The AUD/USD pair traded as high as 0.6749, ending the day a handful of pips below this last.  For once, Australian data supported the local currency, as the Westpac Consumer Confidence Index improved in February by 2.3% to 95.5. The index, however, is still down from a year earlier and while below 100, indicated that confidence remains weak. Nevertheless, the rally in global equities and steady gold prices supported the Aussie. This Friday, Australia will publish February Inflation Expectations, foresee at 4.3%, after printing 4.7$ in January.

The short-term picture for AUD/USD is bullish according to the 4-hour chart, although the bullish potential, in the long run, seems limited. In the mentioned time-frame, the pair is now above a bullish 20 SMA, capped by a bearish 100 SMA which converges with the mentioned daily high. The RSI indicator is stable at around 60, but the Momentum indicator continues to advance, skewing the risk to the upside. The pair now faces a major resistance level at 0.6770 and needs to surpass it to continue advancing.

Support levels: 0.6700 0.6660 0.6630   

Resistance levels: 0.6770 0.6805 0.6840

GOLD

Positive development regarding the coronavirus outbreak fueled risk-on mood on Wednesday and as a result, the riskier assets found demand while Gold had an indecisive trading session. Earlier today, depending on several Chinese news outlets, the recovery rate of coronavirus patients have started to increase while the number of new infection cases seems to be rising at a softer pace. Along with the positive developments, the USD index DXY tested 99 levels while Wall Street posted new all-time highs. Gold had a wait and sees mode virtually almost unchanged on a daily basis looking for more solid developments about the resolution of the virus outbreak.    

Gold trading is still capped at 1.600$ level. 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

While Gold had an indecisive trading session on Wednesday, Silver sank below its critical 17.60$ support keeping its erratic behaviour. Investors are yet to give up for more potential upside while lack of supportive developments holds Silver for more advances. Most likely, a complete resolution about the virus outbreak in China will support the Silver prices due to its demand for the manufacturing sector which is on hold at the moment.

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 was supported by the positive news regarding the virus outbreak in China on Wednesday. However, the strong move up was capped by the rising stock data in the US. Commercial crude oil inventories in the US rose 7.5 million barrels in the week ending February 7th, the EIA reported. This reading came in much higher than the market expectation for an increase of 3 million barrels. On the other hand, OPEC announced that it lowered its forecast for 2020 global oil demand growth by 230,000 barrels per day (BPD) to 0.99 million BPD due to decline in demand caused by the coronavirus outbreak. Also, both Russia and Kazakhstan still have not decided if they agree on a further production cut.

Along with the risk-on mood, WTI managed to re-gain 51.00$ on Wednesday. If WTI keeps its position below 52.00$ level, 51.03$ (October 2019 low), 50.60$ (June/August 2019 support) and 50.00$ levels can be followed as new targets. 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: 51.03$ 50.60$ 50.00$

Resistance Levels: 53.00$ 53.93$ 55.73$


DOW JONES

Dow Jones marked new all-time high on Wednesday as markets cheered a better outlook regarding the coronavirus outbreak. Earlier on Wednesday, due to several Chinese news outlets, the recovery rate of coronavirus patients have started to increase while the number of new infection cases seems to be rising at a softer pace. Sense of the worst being left behind, the CBOE Volatility Index, Wall Street's fear gauge, was down 4.15% on the day indicating the strong risk-on mood. On the other hand, Jerome Powell said that he thinks the US economy was in a good place highlighting the strong labour market and consumer spending. He also added that he could not see any reason why the current expansion of the US economy could not continue and the monetary policy is appropriate at its current level signalling a steady FED for a longer period. On Thursday, the markets will follow the US inflation data set which is highlighted by Powell numerous times about its importance regarding the monetary policy.  

If the index stays over 29.000, 29.500 can be followed as resistance while 30.000 levels can be followed as new targets high. 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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