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Daily Market Report
25 Mar 2020

EURUSD

The EUR/USD pair is up for a second consecutive day, although off daily highs. The pair peaked at 1.0887 ahead of the US opening, as market players turned their back on the greenback and rushed back into high-yielding assets. Equities soared, with European major indexes up roughly 7.0% each. Data came in much worse than anticipated, yet the market was already prepared for it.

According to Markit, the EU economy “suffered an unprecedented collapse in business activity in March as the coronavirus outbreak intensified.”  The Services PMI in the Union plummeted to 28.4, the lowest on record, while manufacturing output was down from 48.7 to 39.5, registering the largest monthly contraction of production since April 2009 German figures were quite alike, with the preliminary estimate of the Services PMI at 34.5 and manufacturing output down to 45.7. US figures were quite alike. The manufacturing output contracted to 49.2, better than the 42.8 expected, although services activity plummeted, with the index down to 39.1 from 49.4 previously. New Home Sales in February were down by 4.4%.

Equities were the best performers with European and American indexes soaring. Whether this rally is sustainable in time, is something yet to be seen. Treasury yields also advanced, as investors are hopeful US Senators will come to an agreement over a massive fiscal stimulus package to counter the coronavirus effects on the economy. This Wednesday, Germany will release the March IFO survey, with preliminary data already out, while the US will publish February Durable Goods Orders.

The EUR/USD pair eased from the mentioned high to settle around 1.0750, below the 23.6% retracement of its latest daily slump at 1.0840. The bullish potential seems still limited, as the pair would need to advance past 1.0900 to shrug off its negative stance. In the 4-hour the pair is above its 20 SMA, which lost its bearish strength, although still far below the larger ones. Technical indicators have turned neutral, with the Momentum barely bouncing from its mid-line and the RSI directionless at around 46.

Support levels: 1.0725 1.0670 1.0630

Resistance levels: 1.0800 1.0840 1.0885

 

USDJPY

The USD/JPY pair has maintained its bullish stance, ending the day with gains although within familiar levels. The pair advanced up to 111.69, surpassing its previous high by a couple of pips, recovering from a daily low of 110.07. The mentioned low was the result of the market rushing away from the greenback amid Fed’s massive QE bringing some relief to market players. Substantial gains in global equities underpinned the pair since London’s opening.

 In the data front, Japan released the March preliminary Jibun Bank Manufacturing PMI, which came in at 44.8, worse than the previous 47.8 and the expected 47.6. The January Leading Economic Index was upwardly revised to 90.5, while the Coincident Index for the same month was revised to 95.2, also above the previous estimate.

The USD/JPY pair has posted a higher high and a higher low for the seventh consecutive day, although it’s struggling to extend gains beyond the 111.50/60 price zone. In the 4-hour chart, the pair has continued to find support in a bullish 20 SMA, which advances above the larger ones. Technical indicators hold within positive levels, although losing their upward strength. Still, the risk is skewed to the upside, with scope to re-test the yearly high at 112.22.

Support levels: 111.05 110.70 110.20

Resistance levels: 111.60 111.90 112.25

GBPUSD

The GBP/USD pair surged to 1.1799, backed by easing demand for the American currency, but also by UK PM Johnson’s announcements late Monday. After refusing to apply tough measures, Boris Johnson finally announced a series of tougher measures against COVID-19, enforcing social distancing through a 3-week lockdown, and the close of all non-essential shops.

UK data was mixed, as the CBI Industrial Trends Survey showed that manufacturing output expectations fell to their weakest since the financial crisis over a decade ago,  printing at -29% in March following a -18% in February The preliminary estimate of the March Markit Manufacturing PMI printed 48, better than the 45 expected, while the Services PMI came in at 35.7, down from 53.2. In both cases, the contraction was attributed to the coronavirus crisis. The UK will release this Wednesday, February inflation figures, with have little chances of triggering relevant market movements.

The GBP/USD pair has stalled its advance well below the previous weekly high, and despite dollar’s weakness, it remains at risk of falling further. The 4-hour chart shows that it stands above a now flat 20 SMA, while the larger moving averages maintain their bearish slopes well above the current level. Technical indicators in the mentioned chart remain below their midlines, so far offering a neutral stance. The risk of a bearish extension would increase on a break below 1.1690.

Support levels: 1.1690 1.1650 1.1605

Resistance levels: 1.1740 1.1790 1.1830

AUDUSD

The Australian dollar advanced against its American rival to 0.5975, its highest for this week, with the pair ending the day around 0.5900. Data coming from the country were mixed, as the Commonwealth Bank Services PMI plunged to 39.8 in March according to preliminary estimates, although the manufacturing index for the same period beat expectations with 50.1. PM Scott Morrison announced that the government is extending restrictions on social movements, adding to the world’s social-distancing stance to contain the spread of Covid-19.

 Still, the robust surge in equities was what backed the pair, alongside gold prices, which also rallied on the dollar’s broad weakness. Spot gold traded as high as $1,631 a troy ounce, ending the day around 1,622. The Australian macroeconomic calendar will remain empty this Wednesday.

The AUD/USD pair heads into the Asian session with a neutral-to-bullish stance according to intraday charts, as the pair has been stuck around the current level pretty much since London’s opening. The 4-hour chart shows that the price is above a mild-bullish 20 SMA, while the larger moving averages maintain their bearish slopes far above the current level. The Momentum indicator bounced just modestly from its mid-line, while the RSI remains directionless at around 52.

Support levels: 0.5850 0.5810 0.5770

Resistance levels: 0.5930 0.5975 0.6000

GOLD

FED’s unlimited QE programme shifted the market sentiment while dragging the USD lower and rallying the equity markets with Gold. The USD index DXY lowered through 102.00 zones and Gold rallied through 1.635$ zones which is recorded as the biggest ever gain on a daily basis against the USD. On the other hand, as the physical Gold supply is now disrupted, the spread seen on the market between buying and selling was extreme. Many of the Gold refineries are expected to be closed for 4 to 6 weeks and also the lockdown in Switzerland where %70 of the all Gold mined globally is refined creating a shortage for physical Gold.  

If Gold stays over 1.600$ level decisively, 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: 1.615$ 1.650$ 1.700$


SILVER

Silver also benefited the unlimited QE move from the FED and kept its rally following Gold on Tuesday. Also, the USD index DXY retraced from 104 zones to 102 zones which also supported the move up. Since the zero to the low-interest environment is usually supportive of precious metals as they are non-yielding assets and the cost to invest in them gets cheaper. Therefore, we might see the Gold and silver prices are supported in the mid-term as the fight against a global recession is now on the table.

From the technical point of view, 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 struggling to gain traction and get away from its lows as the coronavirus pandemic still threatens the global economy with a possible recession and also the price and output war between Saudi Arabia and Russia are putting extra tension over the prices. On the other hand, markets are stişş sceptical about a possible deal between the US and Saudi Arabia which is the only positive development for the oil markets at the moment. Also, the retracement seen in the USD caused by FED’s unlimited QE move is holding WTI for further losses at the moment. 

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

Wall Street started Tuesday trading with a big bullish gap with the hopes of Congress approval of the stimulus bill. Following Monday's talks, US Treasury Secretary Steven Mnuchin and Senate Minority Leader Chuck Schumer said that the coronavirus relief bill was expected to be approved late on Tuesday. Latest chatter suggests that the bill is close to being finalized and investors are waiting for an official announcement. With the greater expectations, Dow Jones closed the day with the biggest single-day gain since 1933 marking a whooping %11.37 incline.

Over the 21.000 level, the resistances might be followed at 21.712 (2018 dip) and 22.000 levels. On the other hand, if Dow Jones retraces back 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. 

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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