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Daily Market Report
06 May 2020

EURUSD

A better market mood lifted the greenback, particularly against its European rivals this Tuesday. The EUR/USD pair fell to 1.0825 as shared currency was the worst performer, affected by news coming from Germany. The German Constitutional Court ruled on the ECB stimulus program introduced back in 2015. The court said that the program had not violated any law, yet gave a three-month ultimatum to the ECB in order to demonstrate the proportionality between the plan and its effects. The news triggered a sell-off in local bonds, weighing also on local indexes, which anyway closed in the green. The upbeat sentiment was underpinned by economic re-openings, as some European countries and US states are slowly returning to normal.

 The EU released its March PPI, which contracted by 1.5% when compared to a month earlier and fell by -2.8% YoY. The US released its April ISM Non-Manufacturing PMI, which came in better than anticipated at 41.8. Still, the employment sub-component plunged to a record low.

 Wednesday will bring the final versions of the EU Markit Services PMIs for April, and the Union’s Retail Sales, these last, seen down by 10.5% in March. The US will publish the ADP survey on private job’s creation seen down by 20 million. The report will be critical ahead of the Nonfarm Payroll report later this week, as the unemployment rate is seen north of 16%.

The EUR/USD pair is trading at the lower end of its daily range ahead of the US close, retaining its bearish stance. In the 4-hour chart, the pair has established below all of its moving averages, with an attempt to regain the upside meeting sellers in the 1.0880 price zone, where it has the 100 and 200 SMA. Technical indicators remain at daily lows, lacking directional strength yet with no signs of downward exhaustion. A steeper decline is to be expected on a break below 1.0790, a strong static support level.

Support levels: 1.0825 1.0790 1.0755

Resistance levels: 1.0880 1.0920 1.0950  

USDJPY

The USD/JPY pair edged lower in the last trading session of the day, ending it a couple of pips above its daily low at 106.43. The pair started the day with a firmer tone, amid the predominant upbeat mood, but the recovery stalled ahead of the 107.00 figure. The late decline had no clear catalyst but easing dollar’s demand. Still, Wall Street posted gains, while US Treasury yields ticked modestly higher. Japan’s markets have been closed and will remain so this Wednesday, as the country is going through the so-called Golden Week.

The USD/JPY pair is trading 106.35, the low set last week and the immediate support level. In the 4-hour chart, the risk is skewed to the downside, given that a flat 20 SMA capped the upside throughout the day while the larger moving averages develop above it. Technical indicators remain within negative levels, without clear directional strength. Below the mentioned 106.35 level, a steeper decline is to be expected.

Support levels: 106.35 106.00 105.65

Resistance levels: 106.95 107.30 107.70  

GBPUSD

The GBP/USD pair remained confined to a tight intraday range this Tuesday, ending the day as it started around 1.2450. The UK April Markit Services PMI was upwardly revised from 12.3 to 13.4, beating the market’s expectations of 12.2. Nevertheless, it indicated an unprecedented contraction as a result of the current coronavirus-related crisis. Meanwhile, the UK has become Europe’s coronavirus epicentre, with over 30,000 dead, surpassing those in Italy. On Wednesday, Markit will report the UK April Construction PMI, foreseen at 22 from 39.3 in the previous month.

The GBP/USD pair is neutral-to-bearish according to the 4-hour chart, hovering around a directionless 100 SMA and below the 20 SMA, this last capping the upside at around 1.2480. Technical indicators spent the day within negative levels, the momentum lacking directional strength and the RSI turning south, currently at 44. Chances are skewed to the downside with scope for a slide toward the 1.2300/10 price zone.

Support levels: 1.2395 1.2355 1.2310

Resistance levels: 1.2485 1.2530 1.2585  

AUDUSD

The AUD/USD pair is up heading into the Asian session, some 20 pips higher from where it left on Monday. The Reserve Bank of Australia had a monetary policy meeting, yet as expected, the monetary policy was left unchanged. Governor Lowe acknowledged the “economy is going through a very difficult period and there is considerable uncertainty about the outlook," although he added there’s room for a strong recovery if the economic activity returns.

The pair managed to advance on the back of rallying equities, partially offset by renewed dollar’s strength. Australia also released the April AIG Performance of Construction Index which plunged to 21.6 from 37.9 previously. This Wednesday, the country will publish March Retail Sales, foreseen at 8.2%.

The AUD/USD pair is within familiar levels, with a slightly positive short-term bias. In the 4-hour chart, technical indicators have entered positive territory, but lack strength enough to confirm additional gains ahead. Over the last few hours, the pair has held above a bearish 20 SMA, unable to move far away from it. The bullish potential, however, remains limited as long as it stays below the 0.6510 price zone.

Support levels: 0.6410 0.6375 0.6350

Resistance levels: 0.6480 0.6515 0.6560

GOLD

The risk appetite returned to markets on Tuesday as the equity markets advanced higher as well with oil prices. However, traders are still betting on Gold and USD as they both had marginal advances too. After hitting mid-1.700$ in mid-April, Gold continues to consolidate protecting 1.700$ handle despite the rising risk appetite amid easing measures in Europe after China and positive developments regarding the vaccine researches. On the other hand, last week, the World Gold Council reported that investment demand for Gold increased %80 during Q1 2020, highlighting the coronavirus pandemic as the “single biggest factor” influencing demand, even offsetting a sharp decline in consumer activity in the sector. Apart from the rising demand, the physical supply of Gold became harder and expensive due to lockdowns. While the demand for investment purposes increased, global jewellery demand sank %39. In the mid-term, as the pandemic eases, geopolitical tensions might continue to rise and also extreme liquidity and low-interest rates might continue to support Gold.  

From the technical point of view, if 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 almost erased its previous day’s losses as almost all assets ended the day with gains. While the risk appetite returned to markets, traders were cautious to keep Gold and USD in their portfolios. Due to the global pause in industrial production, Silver will likely be put on hold until a clear indication of normalization due to its industrial demand. On the other hand, this indecisive mood might give traders the opportunity to invest in Silver for the long-term. 

Silver is keeping its consolidation zone between 14.60$ and 15.50$. As long as Silver stays over 15.00$ 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

WTI caught a great momentum after the May contract hit sub-zero for the first time in history. June contract for WTI started trading around 21.00$ levels and after retracing to the 6.00$ zone the black gold found demand and tested mid-26.00$ levels. As a part of normalization measures, last week, major European countries started to ease coronavirus-related restrictions and opened parts of the economy. Moreover, several states in the United States, including California, announced that they are taking steps to allow people to go back to work. As the hopes of stronger demand in Q1 emerged, production cuts are also supporting the positive mood for oil.

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

Despite starting the day with a bearish gap, Dow Jones failed to sustain its advance over 24.000 level on Tuesday. The CBOE Volatility Index, Wall Street's fear gauge, was down 5.4% indicating the positive mood as the advance mostly supported by energy shares. In the US, several states are already taking steps for normalization supporting the risk appetite. On the other hand, the clash between the US and China about the origin of coronavirus is short-lived at least for now. In the U.S., cases topped 1.2 million with over 70,000 deaths. Despite the big figures, after the peak on April 21st and 24th, the curve started to flatten. On the data front, ISM Non-Manufacturing PMI(Apr) in the US printed 41.8 compared to the last reading of 52.9. Despite the heavy retracement, the reading was over the expected 36.8. On Wednesday, the markets will follow ADP Employment Change(Apr) data in the US.

If the index slides below 23.000 level, 22.500 and 22.000 levels might be seen as new targets down. Over the 24.000 level, the resistances might be followed at 24.680 level (June 2019 and 28 February Low) and 25.000 levels.

Support Levels: 23.000 22.500 22.000

Resistance Levels: 24.000 24.680 25.000 


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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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