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Daily Market Report
20 Mar 2020

EURUSD

The EUR/USD pair has fallen to fresh 2020 lows sub-1.0700, as demand for the American currency remained strong this Thursday, although panic receded, at least temporarily. The pair peaked at 1.0981 at the beginning of the day, as the ECB announced an easing package worth €750 billion so-called "pandemic emergency purchase program" (PEPP) to buy private and public sector securities,  but the pair was unable to hold on to gains, finally losing the former yearly low at 1.0777 and accelerating its slump. The dollar is ending Thursday unevenly across the board, as European indexes closed in the green, while US indexes also posted modest gains.

In the data front, Germany released an unexpected preliminary estimate of the March IFO Business Climate, which fell to 87.7 from 96.  The US published Initial Jobless Claims for the week ended March 13, which jumped to 281K much worse than the 220K expected. The Philadelphia Fed Manufacturing Survey plummeted to -12.7 from 36.7 previously.  Friday’s calendar will be lighter, as Germany will release the February Producer Price Index, Europe will unveil January’s Current Account, while the US will publish February Existing Home Sales.

The EUR/USD pair has bounced modestly from 1.0656, its lowest in almost two years, heading into the Asian session trading a handful of pips above this last. The pair is approaching to be oversold in the daily chart, although technical indicators continue to head firmly south. In the shorter-term, and according to the 4-hour chart, the risk remains skewed to the downside, as technical indicators have barely bounced from their lows, the RSI still within oversold levels. The 20 SMA has broken below the larger ones, heading south roughly 250 pips above the current level.

Support levels: 1.0660 1.0620 1.0575

Resistance levels: 1.0725 1.0770 1.0810

USDJPY

The USD/JPY pair is trading at levels not seen since February this year, having peaked at 110.94 and trading nearby as the day comes to an end. The pair broke higher early Asia, as a result of the ECB’s liquidity injection alongside BOJ’s purchasing a record high of 201.6 billion yen of Japanese stock exchange-traded funds boosting the market’s mood. Asian equities edged lower, but European and American indexes posted interesting gains, further underpinning the pair. Treasury yields, however, lost some ground, with the yield on the benchmark 10-year note down to 1.12%.

Japanese National inflation released at the beginning of the day came in at 0.4% YoY for February, well below the previous 0.7% and the expected 0.8%.  Japan will celebrate a holiday this Friday, which means no data and probably less volatility during the Asian session.

The USD/JPY pair is trading in the 110.60 area, overbought in the short-term but still poised to advance. The 4-hour chart shows that it has advanced above all of its moving averages, with the 20 SMA advancing between the larger ones. Technical indicators head north within overbought territory, supporting further gains ahead toward February high at 112.22.

Support levels: 110.40 110.05 109.65

Resistance levels: 111.30 111.75 112.20

GBPUSD

The GBP/USD pair has tried to recover some ground but ended the day in the red around 1.1530. The pair peaked at 1.1792, ahead of London’s close, as the Bank of England held a special meeting this Thursday and decided to cut the bank rate to 0.10% and increase its holdings of UK government and corporate bonds by £200 billion. The announcement came as the UK’s government announced its preparing to put London in lockdown, and even mobilizing military personnel to support civil authorities as part of a new “Covid Support Force.” PM Johnson is now moving to slow the spread of the virus, although his softer approach in the previous week, took its toll on the Pound.

The GBP/USD pair was unable to hold on to gains, giving up to the renewed dollar’s demand during the last trading session of the day. The 4-hour chart shows that the pair continues to develop below a firmly bearish 20 SMA, which extends its decline below the larger ones. The Momentum indicator advances modestly within negative levels, while the RSI resumes its decline in oversold territory, all of which indicates that the risk remains skewed to the downside.

Support levels: 1.1545 1.1490 1.1440

Resistance levels: 1.1610 1.1660 1.1720  

AUDUSD

The AUD/USD pair is ending a volatile day marginally lower around 0.5750, after falling to 0.5506, its lowest since 2002. The pair fell on the back of RBA’s decision and a mixed employment report. As expected, the central bank trimmed rates by 25bps to 0.25%, a new record low, while also announced the first-ever QE program. The RBA created a $90 billion lending facility to banks for small and medium businesses. In February, the country added 26.7K new jobs, better than the 10K expected, although 20K were part-time jobs. The unemployment rate unexpectedly fell to 5.1%, but the participation rate decreased to 66%. The wide intraday range somehow suggest bears are close to a bottom

The AUD/USD pair recovered to 0.5963 during US trading hours, following the advance in European and American equities, but sellers quickly jumped in. The short-term picture is bearish, as, in the 4-hour chart, the pair retreated from a firmly bearish 20 SMA, while technical indicators have corrected extreme readings before resuming their declines. The pair could retest the mentioned low if it breaks below 0.5700, mainly if sentiment turns sour again.

Support levels:  0.5700 0.5640 0.5590

Resistance levels: 0.5800 0.5850 0.5895

GOLD

As the USD is still dominating the markets, Gold retraced below 1.500$ while the USD index DXY lifted towards 103 levels. Usually, Gold is seen as a safe haven during crisis times. However, as the investors needed cash to desperately support their positions in the equity markets, despite FED’s interest rate moves USD found demand and has been rallying since the sell-off intensifies. The same schema was last seen in the 2008 crisis as both the equity markets and Gold declined at the same time with the need for cash. On the other hand, due to supply chain disturbances, soon Gold might face physical demand shortage and in this case, the price of the yellow metal might be supported.    

Gold tested sub-1.500$ on Thursday with levels last seen in December 2019. Below the 1.500$ level, the support levels can be followed at 1.488$ (%38.20 1.557$-1.445$), 1.472$ (%23.60 1.557$-1.445$) and 1.445$ (2019 dip) levels. On the other hand, if the yellow metal stays over 1.500$ level, 1.514$ (%61.80 1.557$-1.445$), 1.530$ (%76.40 1.557$-1.445$) and 1.557$ (2019 peak) can be followed as resistances. 

Support Levels: 1.488$ 1.472$ 1.445$

Resistance Levels: 1.500$ 1.514$ 1.530$    


SILVER

After dipping to 11.60$ zone on Wednesday trading, Silver tried to gain ground and maintain its position over 12.00$ on limited range Thursday trading. Silver’s close correlation with Gold and its industrial metal label is creating a double-pressure effect which lifted Gold to Silver ratio to hit a 50-year high. 

Below the 12.00$ level, next targets downside can be followed at 11.63$ (2020 low), 10.00$ and 8.40$ (2008 dip). Above the 12.00$ level, the resistances can be followed at 13.00$, 14.29$ (2019 dip) and 15.00$ levels. 

Support Levels: 12.00$ 11.63$ 10.00$

Resistance Levels: 13.00$ 14.29$ 15.00$


CRUDE WTI

After hitting its lowest levels since 2002, WTI jumped around %24 on a daily basis as a technical correction and supported by the reports that the US will intervene in the output war between Saudi Arabia and Russia. According to the WSJ, US diplomats are trying to get Saudi Arabia to cut its production level while at the same time, the White House might look for further sanctions on Russia. Also, as a result of a technical correction, Wall Street tried to re-capture ground with limited gains. However, the effects of the coronavirus pandemic are still not measurable although all the nations that are affected by the pandemic announced heavy economic support programs to save their economies. 

The first support is watched at 26.00$ (2016 dip). Below this level, 24.75$ (2002-2003 support) and 17.05$ (2001 dip) levels can be followed. Over the 30.00$ level, the resistances can be followed at 33.17$ (12-13 March 2020 resistance) and 36.20$ (11 March 2020 peak) levels.

Support Levels: 26.00$ 24.75$ 17.05$

Resistance Levels: 30.00$ 33.17$ 36.20$


DOW JONES

Wall Street dipped sharply on Thursday opening but later in the day, the indexes managed to pick up the pace and managed to end the day with marginal gains compared to their previous sessions with heavy losses. FED is doing its best to support the markets and on Thursday they announced that they have established temporary USD swap lines with Australia, Brazil, Denmark, Korea, Mexico, Norway, New Zealand Singapore and Sweden in order to lessen strains in global USD funding markets. On the other hand, the US Treasury Secretary Mnuchin noted that they will take advantage of lower interest rates to refinance "a lot of US debt". As a result of the need for cash, the USD index DXY rallied through 103 levels although FED’s efforts to offer cheap fundings like all major central banks around the globe.  

Below the 20.000 level, next targets might be followed at 19.680 (2017 dip) and 19.000. Over the 21.000 level, the resistances might be followed at 21.712 (2018 dip) and 22.000 levels.

Support Levels: 20.000 19.680 19.000

Resistance Levels: 21.000 21.712 22.000

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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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