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Daily Market Report
12 Mar 2020

EURUSD

The EUR/USD pair failed to hold in positive territory on Wednesday. As equity prices extend losses in Wall Street, the greenback remained strong, not like during Monday’s market crash. US yields held at recent highs helping USD. US CPI data came in above expectations but had no impact. Economic numbers from February are seen as old news and inflation measures will likely move to the downside after the collapse in crude oil prices. Attention now turns to the European Central Bank meeting on Thursday. Strong actions are expected. ECB is seen cutting rates and probably will announce liquidity measures. The coronavirus outbreak continues to hit Europe, while new cases in China slowed. The World Health Organization declared it a pandemic. The policy response to the spreading of the coronavirus continues to be a factor of attention. The economic plan in the US failed to boost 

From a technical perspective, the pair struggled around 1.1350 and pulled back. Later it fell below 1.1280 weakening further the short-term outlook for the euro. The pair continues to correct lower from 1.1500 and could continue to do so. The next strong support stands at 1.1180 with an intermediate level at 1.1230 (38.2% Fibonacci retracement of the rally to 1.1500). The 1.1180 area should limit losses and favour a rebound. On the upside, a consolidation north of 1.1350 would change the short-term bias to neutral/bullish. Attention above would turn to 1.1400. The critical resistance remains 1.1500 that even despite volatility, should be out of reach for now.

Support levels: 1.1245 1.1200  1.1185

Resistance levels:  1.1305 1.1355 1.1405


USDJPY

The yen appreciated across the board as the Dow Jones drooped below Monday’s lows. But the USD/JPY remained surprisingly steady as a stronger US dollar curbed yen’s upside. The move higher in US yields offered support to the greenback versus G10 currencies. The 10-year rose to 0.85% while the DXY climbed for the second day in a row, erasing most of Monday’s losses. Risk sentiment continues to be a key driver with the global growth outlook, policy response and the spread of the coronavirus, as critical factors. While the virus spreads all over the world, the number of new cases in China is falling. Also, headlines related to the oil price war could move markets.

The USD/JPY climbed to levels near 106.00 in a dramatic and exacerbated recovery. It then pulled back and during Wednesday’s American session failed to hold above 105.00. The pair is moving in a range between 104.15 and 105.00, forming a triangle in short-term time frames. A slide under 104.00 would likely accelerate the decline targeting 103.20 and below 102.80. Technical indicators are moving away from overbought readings, leaving room for a move lower. The 20-SMA in the four hours chart is flat at 104.60, reflecting the recent consolidation. On the upside, a recovery above 105.00 would be positive for the US dollar, but it needs to rise and hold above 105.30/50 to point to a more sustainable recovery.

Support levels: 104.05 103.70 102.80

Resistance levels: 105.30 105.80 106.10


GBPUSD

The GBP/USD pair resumed the correction from 1.3200 during the American session as the US Dollar Index printed fresh highs. While the US dollar starts to move back toward pre-crash levels, Wall Street equity prices hit new lows. The Bank of England did not wait for the next meeting and on Wednesday announced a 50 basis rate cut to tend of the negative impact from the spread of the coronavirus. The decision came in before the presentation of the budget. Chancellor of the Exchequer Rishi Sunak unveiled a 30 billion pound emergency boost to spending. The pound reacted modestly while most analysts considered the announcements as positive for sterling.

Cable dropped to fresh weekly lows during the American session, extending to almost four hundred pips the decline from Monday’s peak. Technical indicators in short-term charts are approaching oversold levels but still point lower, suggesting more losses ahead. The GBP/USD is holding around 1.2830, a relevant support; if it breaks below, the February low at 1.2720 would be exposed. Interim support levels are seen at 1.2800 and 1.2760.

Support levels: 1.2770 1.2720 1.2700

Resistance levels: 1.2890 1.2940 1.2980


AUDUSD

The news flow is all about the coronavirus: the spread of the virus and the policy response.  Australia will soon announce fiscal stimulus, and on Wednesday, Reserve Bank of Australia Deputy Governor Debelle confirmed the central bank was considering QE style operations targeting a price level in bonds. Consumer sentiment dropped to the lowest in five years in Australia. In the US, CPI data was expectably ignored. Inflation is set to slow down in the months ahead, leaving room to more easing from the Federal Reserve. For the Aussie, global factors remain critical, and for the US dollar, US yields. 

Volatility was relatively low in AUD crosses despite all the headlines. The daily range in AUD/USD was significantly below the previous days. The pair peaked at 0.6539 but showed no strength and pulled back to the 0.6500 zone where it looks comfortable, but not likely for much longer. The retreat from 0.6684 (March 9 high) was sharp and kept the pair below the 20-day moving average, leaving the bearish bias intact. With AUD/USD again unable to sustain a recovery, a test of 0.6450 looms. A break lower would open the doors for another leg lower to 0.6400. On the flip side, 0.6550 is the first resistance to consider. The upside, while capped by 0.6630, is likely to be limited and unsustainable. 

Support levels: 0.6460 0.6400  0.6320

Resistance levels: 0.6540 0.6580 0.6625 

GOLD

After another attempt to move over 1.700$, Gold retraced back slightly with profit-taking and now in a wait and sees mode hovering around 1.650$ levels. Solid CPI date set readings in the US and a rebound seen on the US Treasury yields supported the USD and limited Gold’s move on Wednesday. Markets now look forward to the US House coronavirus relief bill and the European Central Bank’s (ECB) monetary policy outcome for near-term trading impetus while coronavirus-related sentiment will continue to play a pivotal role. Also on Wednesday, WHO declared the outbreak as a “pandemic” and officials in the US stated that all flights from Europe to the US might be banned due to escalating number of casualties and cases in Europe. 

From the technical point of view, if Gold manages to stay over 1.650$ level, the resistances might be followed at 1.700$, 1.750$(December 2012 peak) and 1.785$ (2012 multi-time peak). Below the 1.650$, the supports might be followed at 1.615$, 1.600$ and 1.557$.

Support Levels: 1.650$ 1.615$ 1.600$

Resistance Levels: 1.700$ 1.750$ 1.785$


SILVER

Finally, Gold to Silver ratio jumped over 100 level indicating extreme market conditions. The all-time high ratio stands at 118 level as a new target caused by the fears of a global recession possibility. While countries affected by the coronavirus outbreak are taking extreme bans on travelling, the slowdown in the manufacturing sector started being observed in China’s PMI data sets.  

Both psychological and %50.0 of 14.29$-19.64$ level, 17.00$ is still the first target to break for a move up. Above this level, 17.60$ (%38.20 14.29$-19.65$) and 18.38$ (%23.6 14.29$-19.65$) can be targeted. On the downside, the supports can be seen at 16.33$ (%61.8 14.29$-19.65$), 15.55$ (%76.40 14.29$-19.65$) and 15.00$ levels.

Support Levels: 16.33$ 15.55$ 15.00$

Resistance Levels: 17.00$ 17.60$ 18.38$

CRUDE WTI

Markets are witnessing historic times in oil trading as the coronavirus outbreak which declared as a pandemic now pressured the prices while the production cut and pricing war between Saudi Arabia and Russia put last nail to WTI’s coffin creating huge declines. Due to EIA report, crude oil supplies went up by nearly 7.7M barrels during last week, adding to the previous 0.785M barrels build. On the production front, Saudi Arabia’s Aramco is expected to push the production to 13 million BDP.

WTI looks like it found some balance close to its current dip levels. Below the 31.00$ level, 27.40$ (9th of March dip) can be followed as the first target down as well as 26.00$ (February 2016 dip) and 25.00$ (2001-2003 support line). Above the 31.00$ level, 32.79$ (9th of March decline %38.20) and 34.45$ (9th of March decline %50.00) can be followed as resistances.

Support Levels: 31.00$ 27.40$ 26.00$

Resistance Levels: 32.79$ 34.45$ 36.12$


DOW JONES

Dow Jones is now literally in a bear market as White House failed to deliver the economic stimulus package to fight with the financial impact of the coronavirus outbreak which was declared as a pandemic at the moment. The index retraced back to its lowest levels last seen in January 2019 amid better than expected inflation data set seen in the US. The YoY change in the overall CPI slided to 2.3% in February from 2.5% in January (consensus: 2.2%). That 12-month change might drop below 2% in March due to the latest plunge in energy prices while the 12-month change in the core index rose to 2.4% from 2.3%. On Wednesday, the World Health Organization called the coronavirus outbreak a pandemic and with a fresh sell-off wave Dow Jones entered the bear market for the first time since the 2008 financial crisis in the US. Donald Trump informed that he will have a press meeting regarding the countermeasures will be taken to fight the pandemic. Rumours that the US government is getting ready to impose a travel ban for passengers from Europe as the death toll in Europe with Italy leading is increasing at a fast pace. Also, almost all the countries in Europe which are affected by the pandemic continue to take extreme measures. While the government in Slovakia declared a state of emergency, most countries ordered holidays for schools and cancelled social gatherings like sports or cultural events. 

If the index slides below 23.000 level, 22.500 and 22.000 levels might be seen as new targets down. Over the 24.000 level, the resistances might be followed at 24.680 level (June 2019 and 28 February Low) and 25.000 levels.

Support Levels: 23.000 22.500 22.000

Resistance Levels: 24.000 24.680 25.000


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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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