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Daily Market Report
24 Mar 2020

EURUSD

It was another crazy day in the financial world, as weekend news showed that the coronavirus outbreak keeps spreading in Europe and the US, dominating the sentiment. Risk-off dominated the weekly opening, with the Dow Jones futures hitting their 5% limit down, shortly after trading started. In the Forex sphere, major pairs held within familiar levels. The EUR/USD pair fell to 1.0635, surpassing its yearly low by a couple of pips, to bounce to 1.0827 amid the US Federal Reserve decision to expand its QE with no limits. The Fed announced it would purchase an unlimited amount of Treasuries and mortgage-backed securities in order to support the financial market. The central bank also established loan facilities, two to support credit to large employers, and another so-called TALF, the Term Asset-Backed Securities Loan Facility, to support the flow of credit to consumers and businesses.

Wall Street trimmed early losses but the three main indexes closed in the red. Treasury yields initially fell with the headlines, but recover some ground ahead of the close. The yield on the benchmark 10-year note settled at 0.75% after falling to 0.69%. The EU released March preliminary Consumer Confidence, which plunged to -11.6 from -6.6 in February, although better than the -14.2 expected.

This Tuesday, Markit will release the preliminary estimate of its March PMI.  In Germany and the EU, the numbers are expected to have improved when compared to the final February figures. US data, on the contrary, is foreseen below the previous final readings with manufacturing activity seen contracting to 43 and services output down to 42.

The EUR/USD pair holds on to modest gains at the end of the day, although trading below the 23.6% retracement of its latest daily slump. The 4-hour chart shows that the pair is seesawing around a bearish 20 SMA, which maintains its downward slope below the larger ones. Technical indicators have recovered from oversold levels, the Momentum advancing just below its mid-line and the RSI now flat at around 45. The mentioned Fibonacci retracement provides resistance at around 1.0840.

Support levels: 1.0760 1.0725 1.0670

Resistance levels: 1.0800 1.0840 1.0885

USDJPY

The USD/JPY pair is once again ending the day with gains, not far from a fresh monthly high of 111.59. The Japanese currency appreciated at the beginning of the day as expected, as market players reacted to risk-averse weekend news. However, speculative interest returned to the greenback, moreover after the US Federal Reserve announced unlimited QE to counter the ongoing crisis. The pair surged, despite US equities remained in the red and US Treasury yields edged lower.

Japan will release the March preliminary Jibun Bank Manufacturing PMI foreseen at 47.6 from 47.8 previously. It may be a barometer of what PMI for other economies may result later in the day. Japan will also release the January Leading Economic Index and the Coincident Index for the same month, although given that those are all news, the market will likely ignore them.

The USD/JPY pair is defying its recent highs amid the dollar’s strength, bullish short-term. The 4-hour chart shows that a bullish 20 SMA continues to provide intraday support, as it heads north below the larger ones. Technical indicators, in the meantime, however within positive levels, lacking clear directional strength. The pair has room to re-test February’s high at 112.22, and even advance beyond it as long as pullbacks are contained by buyers in the 109 handle.

Support levels: 111.05 110.70 110.20

Resistance levels: 111.90 112.25 112.60

GBPUSD

The GBP/USD pair peaked at 1.1714 at the beginning of the day but ended it in the red around 1.1530. UK PM Boris Johnson addressed the nation on Sunday, announcing that the government will start to take special steps to fight the coronavirus outbreak, warning that the UK is heading towards a lockdown, after appeals to stay indoors were largely ignored. The number of cases in the UK has jumped to 5,911 while the death toll rose to 335. The soft approach of the UK government to the outbreak is back on the table, as the government is still considering whether or not to lock down the country and the closure of all non-essential shops.

Markit will release this Tuesday the preliminary estimate of the UK Manufacturing PMI for March, foreseen at 45 from 51.7 previously. The Services PMI is also expected at 45 down from 53.2 in February.

The GBP/USD pair is heading into the Asian session maintaining its bearish stance, as, in the 4-hour chart, sellers aligned around a bearish 20 SMA rejected the advance. The Momentum indicator in the mentioned time-frame has re-entered negative ground, while the RSI hovers near oversold readings, reflecting the limited buying interest around the pair. The main support for the upcoming sessions is the multi-decade low seen last week at 1.1409.

Support levels: 1.1495 1.1450 1.1405

Resistance levels: 1.1580 1.1620 1.1675

AUDUSD

The AUD/USD pair had a relatively quiet day, ending it unchanged around 0.5790. The pair seesawed within familiar levels trapped between the usual dollar’s demand, and resurgent gold prices. The bright metal soared to $1,561.21 a troy ounce, limiting the downside for the Aussie. During the upcoming Asian session, the country will unveil the preliminary estimates of the March  Commonwealth Bank's PMI. Services activity and Manufacturing output are both seen contracting just modestly when compared to February’s final figures.

The bearish potential of the AUD/USD pair has eased, but the risk seems still skewed to the downside. In the 4-hour chart, the pair is struggling around a bearish 20 SMA, which continues to head south below the larger ones. The Momentum indicator has eased from daily highs and is challenging its mid-line, while the RSI consolidates around 43, reflecting the absence of buyers.

Support levels: 0.5745 0.5700 0.5640  

Resistance levels: 0.5840 0.5895 0.5930

GOLD

FED’s final move to support the markets pressured the USD on Monday and lifted the Gold erasing all its previous week’s losses. The Fed on Monday stated that they have launched an extensive range of new programs to confront disruptions to the economic activity in the face of the coronavirus pandemic which includes buying treasuries and mortgage-backed securities in the "amounts needed," which is essentially seen as an unlimited quantitative easing program. The USD index DXY retraced back to 101.65 levels after testing 103.00 levels for the third consecutive time. However, the move did not affect Wall Street as the indexes in the US kept free falling. Also, the 10-year US Treasury bond yield eased 12% on Monday with the flight to safety. Further, in the week, another wave of Gold selling can be on the table as more traders might be willing to protect their trades against margin calls.

Over the 1.530$ (%76.40 1.557$-1.445$) resistance, 1.557$ (2019 peak), 1.600$ and 1.615$ can be followed as resistances. Below the 1.530$ (%76.40 1.557$-1.445$) level, the support levels can be followed at 1.514$ (%61.80 1.557$-1.445$) and 1.500$ levels.

Support Levels: 1.530$ 1.514$ 1.500$

Resistance Levels: 1.557$ 1.600$ 1.615$


SILVER

Silver followed the trend on Monday trading as FED announced an unlimited QE and finally managed to stop the USD rallying. The white metal lifted almost 10.00$ on the first day of the trading week and the move also was supported by the lack of supply for the physical demand of Silver. Apart from Silver’s current industrial usage, the white metal will be essential for 5G technology in the future. Therefore, the demand for silver might find an extra boost when the technology reaches the consumer level. Although the move up was seen in the last couple of days, the Gold to Silver ratio still stands around 118 which indicated the Silver’s underperforming status this year.

Below the 13.00$ level, next targets downside can be followed at 12.00$ and 11.63$ (2020 low). Above the 13.00$ level, the resistances can be followed at 14.29$ (2019 dip), 15.00$ and 15.55$ levels. 

Support Levels: 13.00$ 12.00$ 11.63$

Resistance Levels: 14.29$ 15.00$ 15.55$


CRUDE WTI

WTI is still trading around its lowest levels since 2001 as the global recession now seems imminent and the output war between Saudi Arabia and Russia is still intact. While the intervention of the US is expected to the situation, Saudi Arabia stated that they can ramp up the oil output to a record of 12.3 Mbpd last week. On the other hand, last Friday, driller Baker Hughes reported the US oil rig count went down by 19 oil rigs, taking the active oil rigs to 664. Also, on last Friday, Giovanni Serio, Head of Research at Vitol, which is the world’s biggest oil trader, said that demand is expected to fall by more than 10 million barrels per day (BPD), or about 10% of daily global crude consumption due to economic slowdown caused by the corona pandemic, as reported by Reuters.

From the technical point of view, 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$ 23.00$ 20.00$

Resistance Levels: 24.00$ 24.75$ 26.00$ 


DOW JONES

FED’s latest big gun failed to support the relief in the markets as Dow Jones refreshed its dip level in 2020. On Monday, the FED stated that they have launched an extensive range of new programs to confront disruptions to the economic activity caused by the coronavirus pandemic which includes buying treasuries and mortgage-backed securities in the "amounts needed," which is seen as an unlimited quantitative easing program. In the meantime, US Treasury Secretary Mnuching told CNBC on Monday that Congress was very close to approving a fiscal stimulus package but the news failed to provide a boost to risk-sensitive stocks.

Dow Jones hit 18.213 level on Monday as new low level since November 2016. Below the 19.000 level, the next targets might be followed at 17.884 (October 2016 dip), 17.000 (June 2016 dip) and 15.419 (2016 dip) levels. Over the 19.000 level, the resistances might be followed at 19.700 (2017 dip) and 20.000 levels.

Support Levels: 18.213 17.884 17.000

Resistance Levels: 19.000 19.700 20.000


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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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