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Daily Market Report
23 Mar 2020

EURUSD

The EUR/USD pair fell on Friday to 1.0637 its lowest in almost two years, to close the week in the red just below the 1.0700 figure. The pair advanced at the beginning of the day, amid a bounce in worldwide equities following massive stimulus announces from multiple central banks. Wall Street, however, tumbled on the last trading day of the week, to close its worst weekly performance in over a decade. Falling oil prices and the coronavirus outbreak growing exponentially in Europe and the US, dented the market’s mood, with speculative interest rushing to buy the greenback massively.

On Friday, the US Federal Reserve announced it expanded support for state and municipal money markets using the new money market liquidity facility and enhanced its swap lines with some other central banks. On Saturday, reports made the rounds that Germany would raise the debt ceiling include a supplementary government budget of 156 billion.

Meanwhile, the pandemic keeps spreading. Over the weekend, the number of cases continued to grow, with Italy reporting 800 deaths just on Saturday. Spain reported roughly 500 deaths on Sunday. The US is now third in the list of countries with most cases, and US President Trump declared New York City a disaster zone, and the city was put under lockdown. Covid19-related headlines would likely keep overshadowing data,  although this Monday, the EU will release the preliminary estimate of March Consumer Confidence, foreseen at -6.5 from -6.6 previously.

The EUR/USD pair closed Friday unchanged, although a lower low and a lower high daily basis suggest that bears are not done yet. In the mentioned time-frame, the pair is far below all of its moving averages, while the Momentum indicator maintains its bearish slope, despite being in oversold levels. The RSI lost its bearish strength but holds around 33. Shorter-term, and according to the 4-hour chart, the risk is skewed to the downside, with the 20 SMA having accelerated its slump below the larger ones, providing dynamic resistance at around 1.0830, where the pair set a top on Friday. Technical indicators have recovered from oversold levels, but remain well into negative ground and with limited upward strength.

Support levels: 1.0620 1.0575 1.0530

Resistance levels: 1.0725 1.0760 1.0800

USDJPY

The USD/JPY pair surged to 111.50, its highest in a month, as demand for the greenback kept overshadowing the yen’s safe-haven condition. The pair fell to 109.32 early Friday as the market temporarily left the dollar and demanded high-yielding assets, although investors returned to the dollar as the week came to an end, amid the escalating coronavirus crisis. The pair retreated from the mentioned high but settled well sub-111.00, weighed by some profit-taking ahead of the close, and US Treasury yields, which turned lower on Friday. The yield on the benchmark 10-year Treasury note settled at 0.88%.

Japan won’t release macroeconomic data at the beginning of the week. Discouraging headlines throughout the weekend will likely keep investors in risk-off mode, and the JPY could benefit from it, particularly during the Asian session, although given the dollar’s demand, the decline may be limited.

The USD/JPY pair retains its bullish stance despite retreating ahead of the close, given that, in the daily chart, it closed the week well above all of its moving averages, while technical indicators consolidate at weekly highs well above their midlines. In the 4-hour chart, it continues to develop above all of its moving averages, with the 20 DMA advancing above the larger ones. Technical indicators have lost their bullish momentum but hold near overbought levels. A break through the mentioned high favours an upward extension toward 112.22, February monthly high.

Support levels: 110.40 110.05 109.65

Resistance levels: 111.05 111.50 111.90

GBPUSD

The GBP/USD pair closed Friday in the green but coming from a fresh multi-decade low of 1.1409. The pair plummeted for a second consecutive week, as the UK Government’s response to the coronavirus outbreak came too late. On Sunday, the number of cases in the UK stood at 5,067 while the death toll reached 233. Late Friday, British  PM Johnson and Finance Minister Sunak announced a series of measures meant to deal with the effects of the crisis on the economy, announcing that the government would help companies pay wages as London entered lockdown.

Also, the UK Financial Conduct Authority asked on Saturday to listed companies to delay publication their preliminary results for at least two weeks,  to better assess the impact of the current crisis on their profitability. At the same time, the BOE’s Prudential Regulation Authority would cancel non-critical data requests, on-site visits and deadlines. The government is said to be looking to help self-employed Britons, although no measures have been announced yet.

The GBP/USD pair has settled above 1.1600 but far below its Friday’s high at 1.1933. The daily chart shows that technical indicators have recovered modestly from extreme levels but still in oversold territory, while far below moving averages, keeping the risk skewed to the downside. In the 4-hour chart, the pair has failed to recover beyond a bearish 20 SMA, currently at 1.1745, while technical indicators remain within negative levels, the Momentum advancing but the RSI heading lower at around 39.

Support levels: 1.1620 1.1570 1.1525

Resistance levels: 1.1700 1.1745 1.1790

AUDUSD

The AUD/USD pair posted a modest advance on Friday to finish the week around 0.5800, down for a second consecutive week and up from a multi-year low of 0.5506. The Aussie advanced against its American rival to 0.5985 as Fed’s decision to expand the currency swap lines to nine more banks brought some temporal relief to markets, which anyway was reverted on Friday, as the coronavirus crisis keeps escalating worldwide.

On Sunday, Australian PM Morrison announced the government would pump in A$66.4 billion into the economy to counter the economic impact of the coronavirus pandemic. The government will provide A$25.2 billion in support to businesses and not-for-profit charities while also offer support to small businesses. Morrison added that more measures and more support are in the pipeline. Australia won’t release relevant data this Monday.

The AUD/USD pair remains extremely oversold, but chances that it could turn the tie are extremely low, given the crisis context. In the daily chart, technical indicators have recovered modestly but remain in extreme levels, while the 20 DMA heads south almost vertically over 500 pips above the current level. In the 4-hour chart, the pair tried to recover above a bearish 20 SMA, but settled below it, while technical indicators have recovered from extreme oversold levels, but lost their strength within negative levels.

Support levels: 0.5745 0.5700 0.5640  

Resistance levels: 0.5840 0.5895 0.5930

GOLD

Gold tried to find balance last Friday after plunging from 1.700$ levels to sub-1.500$ levels as the coronavirus pandemic sparked a flight to liquidity. The USD index DXY retraced from 103 levels to sub-102 levels although FED’s interest rate decision and QE move to support the markets should pressure the greenback under normal conditions. As the move looks like the move in the 2008 financial crisis, Gold might start another leg up as the equity markets find a balance after the heavy selling wave. This week’s data highlight is the Nondefense Capital Goods Orders Excluding Aircraft in the US on Wednesday. However, markets will definitely be driven by the coronavirus pandemic updates as the affected countries continue to take extreme cautions such as travel bans and lockdowns.  

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

Silver also tried to gain some traction at the end of the week alongside Gold as the USD index DXY retraced from its highs. Last week, the cash-hungry markets pressured all the precious metals alongside the meltdown seen on the equity markets. On the other hand, falling silver prices caused another effect in the markets as an upsurge was seen on the physical Silver demand. On March 12, the United States Mint said it temporarily sold out of American Silver Eagle bullion coins exceeding 300% of what was sold last month. In the short-term market conditions, the liquidity needed to keep the equity margins alive will most likely to pressure the precious metals unless a bounce back is seen on the markets. 

Below the 12.00$ level, the next target 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

WTI’s effort to gain back traction short-lived on Friday and the black gold retraced back close to its 2020 dip levels. Starting from the beginning of the year WTI stayed under heavy selling pressure caused by the coronavirus outbreak by that time. While the move down started with the concerns of a global slowdown in demand, later the output war between Saudi Arabia and Russia sparked another selling wave. Also, due to demand for the USD to save margin calls in the equity markets pushed the greenback higher adding extra pressure over WTI. The barrel of WTI pulled-off the reversal from multi-year lows on Thursday after US President Trump hinted he may intervene in the Saudi Arabia- Russia price war at an “appropriate time”. The price war between the two oil giants is likely flooding markets worldwide with cheap oil that has led to the recent collapse in the prices. On the other hand, WSJ said the US will impose production quotas on oil companies for the first time in nearly 50 years, adding at the same time that the US could impose sanctions against Russia amidst the current oil price war between this country and Saudi Arabia. The effect of the news was short-lived and after spiking over 28.00$ WTI sank below 25.00$.

Below the 23.00$ the supports can be seen at 22.00$ and 20.00$ (2020 dip). Over the 24.00$ the resistances can be followed at 24.75$ (2002-2003 double support) and 26.00$ (2016 dip).

Support Levels: 23.00$ 21.00$ 20.00$

Resistance Levels: 24.00$ 24.75$ 26.00$


DOW JONES

Dow Jones failed to gain traction amid countermeasures taken by FED to support the markets. Although the Fed's reestablishment move of USD swap lines to lessen strains in funding markets seems to have eased concerns over USD shortage, investors are still worried about a long-lasting global recession amid worldwide lockdown to limit the spread of coronavirus. The USD index DXY retraced back from its high at 103 to 102 zone but also Dow Jones retraced back close to its 2020 lows before the weekend holiday. As all the key macro-economic data sets are expected to retrace it is highly possible that the move down will continue in the following months. Also, as the number of cases and the death toll continues to rise in the US, more and more extreme cautions taken will likely to pressure the markets.

If Dow Jones continues to stay below 20.000 level, the next targets downside might be followed at 19.000, 17.884 (October 2016 dip) and 17.000 (June 2016 dip) levels. Over the 21.000 level, the resistances might be followed at 21.712 (2018 dip) and 22.000 levels.

Support Levels: 19.000 17.884 17.000

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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