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Daily Market Report
04 May 2020

EURUSD

The EUR/USD pair hit 1.1018 on Friday but retreated ahead of the close to end the week with substantial gains at 1.0980. The greenback remained under selling pressure, following the lead of equities and despite a better than anticipated April ISM Manufacturing PMI, which came in at 41.5, down fro the previous 49.1 but above the expected 36.9. The Markit Manufacturing PMI for the same month was downwardly revised to 36.1 from 36.9.

Wall Street closed in the red, as the market’s sentiment took a turn to the worse after US President Trump menaced to impose new tariffs on China, accusing the country from miss-handling the coronavirus outbreak. Earnings reports added to the sour mood as Amazon’s first-quarter profit missed expectations. Apple’s earnings beat expectations, but revenue growth remained flat.

This Monday, Markit will publish the final versions of the Union manufacturing PMIs, while the EU will release the May Sentix Investor Confidence, foreseen at -30 from -42.9 previously. The US will publish the ISM-NY Business Conditions Index and March Factory Orders.

The daily chart for the EUR/USD pair shows that despite technical indicators entered positive territory, market players are reluctant to push it much further, as the pair was rejected from a bearish 100 DMA, while the RSI lost directional strength at around 56. In the shorter-term, and according to the 4-hour chart, the risk is skewed to the upside, as technical indicators turned flat well above their midlines, while the pair develops above all of its moving averages. The 20 SMA is advancing below the larger ones, although the medias MAs confined to a tight range.

Support levels: 1.0940 1.0900 1.0865  

Resistance levels: 1.1020 1.1050 1.1085

USDJPY

The USD/JPY settled at 106.90, down for the week. The pair attempted to regain the 107.00 level on Thursday, but the broad dollar’s weakness weighed more. The sour tone of equities and US Treasury yields consolidating at weekly lows weighed on the pair. Japan released Tokyo inflation, which was up by 0.2% YoY in April, below the expected 0.4%. The core reading which excludes fresh food prices, printed at -0.1%. The April Jibun Bank Manufacturing PMI came in at 41.9, below the previous 43.7. Japanese markets will remain close at the beginning of the day due to a local holiday.

The USD/JPY pair is bearish according to the daily chart, as it continues to develop below all of its moving averages. The 20 DMA heads marginally lower providing dynamic resistance at around 107.70, also a strong static resistance level. Technical indicators, in the meantime, remain within negative levels, lacking directional strength. In the shorter term, and according to the 4-hour chart, the pair is neutral-to-bearish as technical indicators hover within neutral levels, as the price pressures its 20 SMA while below the larger ones.

Support levels: 106.50 106.10 105.70  

Resistance levels: 107.30 107.70 108.05

GBPUSD

The GBP/USD pair retreated sharply at the end of the week after flirting with April’s monthly high, settling around the 1.2500 level. The April UK Markit Manufacturing PMI was downwardly revised to 32.6, worse than expected, while Consumer Credit plunged to £-3.8 B in March. PM Johnson was optimistic about the coronavirus situation, as he tweeted that the kingdom is “past the peak and on the downward slope.” Nevertheless, it is quite unlikely that the UK will lift the lockdown anytime soon, suggesting an extended economic setback ahead.

The UK won’t release macroeconomic data until next Tuesday when Markit will unveil the final version of the April Services PMI. This week, the Bank of England will have an economic meeting, and already announced an early release of its interest rate decision ahead of London’s opening next May 7.

The GBP/USD pair keeps losing upward momentum according to the daily chart, as technical indicators have eased to finish the week around their midlines with mild-bearish slopes. The same chart shows that the price stands above a flat 20 DMA but below the larger ones. The 200 DMA is flat around 1.2645, where the pair topped last week. In the 4-hour chart, the picture is quite alike, as the Momentum indicator is flat around its mid-line while the RSI heads south, currently at 51. The price is battling with the 20 SMA, while the larger moving averages stand below the current level.

Support levels: 1.2480 1.2440 1.2395

Resistance levels: 1.2530 1.2585 1.2640

AUDUSD

The AUD/USD pair edged lower for a second consecutive day on Friday, settling in the 0.6410 price zone and trimming most of its weekly gains. Australian data came in worse than previously estimated, as the Commonwealth Bank Manufacturing PMI fell to 44.1 in April, while the AIG Performance of Manufacturing Index for the same month plunged to 35.8 from 53.7 previously. March New Home sales fell by 21.1%, after advancing 6.2% in the previous month. Wall Street’s decline maintained the pair under pressure throughout the last American session.

Australia is set to publish April TD Securities Inflation during the upcoming Asian session, previously at 0.2% MoM and 1.5% YoY. The country will also release March Building Permits, seen down by 15% after advancing 19.9% in the previous month.

The AUD/USD pair has continued to lose its positive momentum, and the daily chart shows that it’s nearing a bullish 20 DMA after meeting sellers around a bearish 100 DMA. Technical indicators turned sharply lower, barely holding above their midlines. In the shorter term, and according to the 4-hour chart, the risk is skewed to the downside as technical indicators maintain their bearish slopes well into negative territory while the pair slides below a now flat 20 SMA. A flat 100 SMA provides immediate support at around 0.6385.

Support levels: 0.6385 0.6350 0.6310

Resistance levels: 0.6440 0.6480 0.6515

GOLD

After facing a heavy retracement on Thursday, Gold tried to regain its losses on Friday as the risk appetite lost its charm. As hopes of a medical solution for coronavirus pandemic emerged inline with easing measures planned in Europe after China, markets started to buy the aftermath of the pandemic. On the other hand, Thursday trading saw some sell-off action due to month-end profit-taking. Markets returned normal on Friday as the new trading month started. While Wall Street saw some selling, Gold tried to re-gain its 1.700$ levels amid the retracement seen on USD. On the physical demand side, China's gold market grew substantially in the first quarter (Q1) of 2020 as investors sought safe-haven assets amid the COVID-19 outbreak, according to the China Gold Association (CGA). The combined turnover of all gold products on the Shanghai Gold Exchange (SGE) soared 54.08 percent to 6.4 trillion yuan (about 907 billion U.S. dollars) in Q1, the CGA data showed. On the other hand, ETFs bought 298 tonnes of gold in the first quarter, nearly as much as they bought throughout all of 2019. That took their total ownership to a new record of 3,185 tonnes. For gold ETFs, it had the highest quarterly inflows in four years “amid global uncertainty and financial market volatility,” the World Gold Council said in its report. Data wise, ISM's Non-Manufacturing PMI data from the US will kick-off the week. On Wednesday, Caixin Services PMI data from China and the IHS Markit's Services and Composite PMI figures for April (final) from Germany and the euro area will be watched closely by the market participants. In the second half of the day, the ADP Employment Change will be featured in the US economic docket while on Friday all eyes will be on the NFP dataset in the US.

From the technical point of view, as long as Gold decisively stays over 1.700$, the resistances might be followed at 1.750$ (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

Silver tried to pick up traction on Friday as market sentiment changed. While the riskier assets retraced back, demand for safe havens emerged as Gold tested its critical resistance once again. Despite the traction seen in Gold, Silver was again a bit reluctant to advance its move staying a tick below 15.00$. While the Silver demand is subdued due to economic activity pause created by the coronavirus pandemic, also the supply side is having its own issues as the mining activity is halted by the same reason. Therefore, the price of Silver is in a balance caused by disruptions both in the supply and demand side. This situation is causing a big gap in the Gold to Silver ratio. The rate hit 120 on March as historic high and the current rate is hovering around 112 levels. Therefore, any positive resolution in the current economic state will likely trigger a rally for Silver.

As long as Silver stays over 15.00$ levels, 15.55$ and 16.33$ levels can be followed as resistances. Below the 15.00$ level, the targets can be followed at 14.29$ (2019 dip), 13.00$ and 12.00$ levels.  

Support Levels: 14.29$ 13.00$ 12.00$

Resistance Levels: 15.00$ 15.55$ 16.33$


CRUDE WTI

The June contract for WTI had its fourth consecutive day with gains on Friday. The Baker Hughes data supported WTI trading as the US oil drillers have cutback rigs for the seventh consecutive week, with the total active US rig count falling to 408 from 465 last week. On the other hand, the production cut agreed by OPEC+ kicked in on 1st of May with a level of 9.7 million BPD. On the other hand, news that major oil companies announced voluntary crude production cuts and the US considering measures to support the domestic oil companies also helped oil prices with its recovery from the historic crash. US Treasury Secretary Steven Mnuchin said on Wednesday, the plan could include adding millions of barrels of oil to already-teeming national reserves.  

WTI is now at a breakpoint at a tick below 20.00$ level which will signal the next move for the black gold. A steady close over 20.00$ levels can be considered as a start of normalization in oil prices for WTI’s June contract. Above the 20.00$ level, the resistances can be followed at 21.35$ (June contract start) and 23.00$ levels while below the 15.00$ level, next targets downside can be followed at 12.00$ and 6.60$ levels. 

Support Levels: 15.00$ 12.00$ 6.60$

Resistance Levels: 20.00$ 21.25$ 23.00$


DOW JONES

Wall Street started May with a retracement as the risk sentiment on the markets shifted. Indicating the flight-to-safety, the CBOE Volatility Index, Wall Street's fear gauge is up nearly 12% on the day at 38.2 points. The fall-back was mostly led by the technology index as Apple and Amazon shares faced a sell-off due to disappointing Q1 earnings. This week will be a busy one in terms of data agenda. On Tuesday, ISM's Non-Manufacturing PMI data from the US will kick-off the week. Also, on Wednesday, Caixin Services PMI data from China and the IHS Markit's Services and Composite PMI figures for April (final) from Germany and the euro area will be watched closely by the market participants. In the second half of the day, the ADP Employment Change will be featured in the US economic docket while on Friday all eyes will be on the NFP dataset in the US.

If the index continues to stay below the 24.000 level, 23.500 and 23.000 levels might be seen as new targets down. Over the 25.000 level, the resistances might be followed at 25.500 level and 26.000 levels.

Support Levels: 24.000 23.500 22.000

Resistance Levels: 25.000 25.500 26.000


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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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