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Daily Market Report
14 Feb 2020

EURUSD

Risk-off returned to financial markets this Thursday, amid renewed concerns related to the coronavirus outbreak after roughly 15,000 new cases and over 240 deaths were reported as of February 12, bringing the death toll to over 1,350. The EUR/USD fell to a fresh multi-year low of 1.0833, amid renewed dollar’s demand and self euro’s weakens.

Data released the Thursday favoured the slide, as Germany final CPI came in as expected and as previously estimated, while US inflation came in better than expected in the same month. Annual CPI in the country hit 2.5%, while the core reading resulted at 2.3%. This Friday, Germany and the EU will release their preliminary estimates of Q4 GDP. German’s growth is foreseen at 0.1% in the three months to December, while for the Union the forecast is of 0.1%. The US will publish January Retail Sales and the February preliminary estimate of the Michigan Consumer Sentiment Index, foreseen at 99.5 from 99.8 final in January.

The EUR/USD pair is trading near the mentioned low, unable to post a relevant bounce, leading to oversold conditions in technical readings. The  4-hour chart shows that the 20 SMA keeps heading firmly lower above the current level, providing dynamic resistance and far below the larger ones. Technical indicators maintain their bearish slopes despite being in extreme levels, supporting further declines toward the 1.0810 price zone.   

Support levels: 1.0810 1.0770 1.0725

Resistance levels: 1.0895 1.0930 1.0965 

USDJPY

The USD/JPY pair edged lower this Thursday, falling to 109.61 as risk aversion dominated financial markets, boosting demand for safe-haven assets. Fears, however, receded during US trading hours, with US indexes in the red but off their daily lows and US Treasury yields trimming early losses. The pair stabilized in the 109.70/80 price zone during US trading hours.

Japan released at the beginning of the January Producer Price Index, which beat expectations, rising 0.2% MoM and 1.7% when compared to a year earlier. Early Friday, the country will release December Tertiary Industry Index, foreseen at -1.6% from 1.3% in November.

The USD/JPY pair has turned technically neutral, with a limited bearish potential according to the 4-hour chart. The pair is back below a now flat 20 SMA, but holding above also directionless 100 and 200 SMA. Technical indicators are recovering from negative levels, flirting with their midlines, indicating absent selling interest. Nevertheless, and given the risk-off sentiment, the pair could resume its decline mainly if it breaks below 109.40, the immediate support.

Support levels: 109.40 109.00 108.65

Resistance levels: 110.35 110.70 111.00

GBPUSD

The GBP/USD pair soared to 1.3069, its highest in over a week after UK PM Johnson reshuffled its Cabinet. The run came as Sajid Javid resigned as the UK's Chancellor of the Exchequer. Rishi Sunak has been appointed as the new Chancellor and has a few weeks to come up with a new budget for the kingdom. Nevertheless, Downing Street clarified that Sunak has been part of the budget preparations and those preparations continue at pace. Furthermore, he is said to be supportive of fiscal stimulus, which would take some of the pressure on the Bank of England to cut rates.

UK House Prices rose in January by 17%, according to the RICS survey,   the first time in one and a half years, another piece of macroeconomic data Pound-supportive. There are no reports scheduled in the UK this Friday.

The GBP/USD pair retains most of its daily gains ahead of the Asian opening, trading at around 1.3050. The 4-hour chart shows that a bullish 20 SMA provided intraday support, while the pair settled above its 100 and 200 SMA, which continue to lack directional strength. Technical indicators have turned flat after reaching overbought readings, rather reflecting the ongoing consolidation at highs than suggesting an upcoming slide. Further gains are to be expected on an extension beyond 1.3075, the immediate resistance.

Support levels: 1.3020 1.2990 1.2945

Resistance levels: 1.3030 1.3075 1.3110

AUDUSD

The AUD/USD pair has put an end to its latest rally, closing the day in the red but still holding above the 0.6700 level. The Aussie was affected by returning concerns about the coronavirus outbreak, leading to sharp loses in worldwide equities. Also, Australian data missed the market’s expectation as Consumer Inflation Expectations resulted in 4.0% in February, below the previous 4.7%. RBA’s Governor Lowe participated in a panel discussion at the Australia-Canada Economic Leadership Forum, in Melbourne, but failed to trigger some action around the pair, as he repeated well-known messages. There are no macroeconomic releases scheduled in the country this Friday.

 The  4-hour chart for the AUD/USD pair shows that pair is barely resting above a mildly bullish 20 SMA, while a firmly bearish 100 SMA capped the upside for a second consecutive day. Technical indicators continued to ease within positive levels, now holding just above their midlines. Below the 0.6700 figures, the short-bearish stance will become more evident, with the pair then poised to extend its decline toward 0.6630.

Support levels: 0.6700 0.6660 0.6630   

Resistance levels: 0.6770 0.6805 0.6840

GOLD

Gold is still keeping its cautious-bullish tone as the main risk driver is being the coronavirus outbreak. While the investors are mostly betting on the virus outbreak is being under control, safe havens like Gold are hovering around their upper zones ready to react to any negative developments. On the other hand, as FED keeping its on-hold status with low-interest rates at least for now is also favouring Gold. The USD index DXY was supported on Thursday trading finally gaining ground over 99 levels with the support of better than expected US inflation dataset which was highlighted by the FED numerous times about its impact on the monetary policy. However, the virus outbreak was enough to carry the Gold up amid USD gaining strength.

Gold trading 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

Silver is trying to keep its consolidation zone and looking for a catalyst for a move up. Fear of an incline in the industrial demand caused by the deadly virus outbreak is now the primary driver for the white metal, unlike Gold’s safe haven etiquette. Therefore, the same expectation keeping Wall Street alive is also supporting Silver against further declines.

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 failed to test 52.00$ level on Thursday trading and retraced back to mid-51.00$ zone as the markets observing the development of the coronavirus outbreak. The sharp increase seen in the reported number of coronavirus infections on Thursday revived concerns over a dismal global oil demand outlook and weighed on the WTI. However, a spokesperson for the World Health Organization (WHO) confirmed that the spike seen in the infection numbers were caused by the change Chinese officials made on how to determine the cases. On the other hand, the US Energy Secretary Brouillette stated on Thursday to Reuters that if the Chinese market is off by half a million barrels, that is 0.5% of the total market and they are not going to see that impact on pricing dramatically. However, the market thinks the opposite causing a heavy sell-off which started in the first week of January as the virus outbreak news first emerged. On the OPEC+ side, Russia still did not decide in they will agree on further production cuts to support the falling oil prices.

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

Wall Street started Thursday trading on a back foot along with the heavy increase in new coronavirus cases in China. China has reported a sharp incline in the number of confirmed coronavirus infection cases after changing the method of counting which triggered a flight-to-safety as investors realized that the outbreak would be more severe than initially anticipated. On the other hand, better than expected US inflation data set which is highly praised by the FED limited further losses in Wall Street. The data from the US showed that the annual core CPI in January remained steady at 2.3% and beat the market expectation of 2.2% while the consumer price index expanded to 2.5% on yearly basis beating estimations of 2.4%. On Friday markets will follow up the retail sales and consumer sentiment index in the US.

If the index keeps its ground over 29.000 level, 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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