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Daily Market Report
08 May 2020

EURUSD

The shared currency retained the doubtful honour of being the weakest dollar’s rival this Thursday. The EUR/USD pair fell to 1.0766, a fresh multi-week low, but bounced back toward the 1.0800 price zone, where it holds stable ahead of the Asian opening. German data weighed on the pair, as Industrial Production plummeted in March, down by 9.2% in the month and declining 11.6% when compared to a year earlier.

The pair remained under pressure despite US data was also disappointing. According to the Challenger Jobs Cut report, the number of layoffs reported for US companies in April jumped to 671.129K from 222.288K in March. Initial Jobless Claims for the week ended May 1 resulted in 3.17 million, worse than the 3 million expected. However, the preliminary estimate of Q1 Nonfarm Productivity fell by 2.5% from 1.2% in the previous quarter, while the Unit Labour Costs in the same quarter soared to 4.8%, both beating expectations. Falling US Treasury yields and resurgent gold were behind the dollar’s latest decline.

This Friday, the US will publish the April Nonfarm Payroll report. The country is expected to have lost 22 million jobs throughout the month, while the unemployment rate is seen jumping to 14% from 4.4%. Nevertheless, there is speculation that such a rate could be closer to 20%. Average Hourly Earnings are seen up by 0.3% in the month, and by 3.3% when compared to a year earlier.

The EUR/USD trimmed daily losses and posted a modest intraday gain, although it holds within familiar levels around the 1.0800 figure. The bullish potential remains well limited, as, in the 4-hour chart, the pair is developing below all of its moving averages, with the 20 SMA heading south below the larger ones. Technical indicators in the meantime, have corrected oversold conditions, but detained their recoveries below their midlines and turned flat.

Support levels:  1.0790 1.0755 1.0710

Resistance levels: 1.0865 1.0900 1.0940

USDJPY

The USD/JPY pair peaked at 106.65 but trimmed intraday gains during the last trading session, to settle around 106.20. The Japanese currency eased amid higher US Treasury yields at the beginning of the day and the good performance of equities, but government debt yields edged sharply lower during US trading hours, with the yield on the benchmark 10-year note down to 0.62% from 0.72%. The slump came amid mounting speculation on negative fed funds rate in 2021, a result of the ongoing economic contraction due to the coronavirus pandemic.

Japan published the April Monetary Base, which increased by 2.3% YoY, worse than the 3.2% expected and below the previous 2.8%. This Friday, the country will publish March Labour Cash Earnings and Overall Household Spending for the same month.

The USD/JPY pair is holding on to its bearish stance and has room to extend its decline toward the 105.00 price zone. In the 4-hour chart, the intraday advance was rejected by sellers aligned around a bearish 20 SMA, which continues to develop below the larger ones. Technical indicators retreated from their midlines, now lacking directional strength within negative levels. A steeper decline is to be expected on a break below the 106.00 figure.

Support levels: 106.00 105.65 105.20

Resistance levels: 106.70 107.00 107.30

GBPUSD

The GBP/USD pair was quite volatile this Thursday but finished the day little changed around 1.2350. The pair peaked at 1.2418 after the Bank of England unveiled its latest decision on monetary policy. The central bank left rates and the APP unchanged, although two out of nine voting members voted to expand this last. Policymakers left doors opened for further easing, and governor Bailey said that the BOE is not ruling anything out on further policy measures. The pair later fell to 1.2265 amid resurgent dollar’s demand to then return to the current level as sentiment toward the greenback turned sour amid mounting speculation US rates could become negative next year.

The UK won’t release relevant data this Friday as the country celebrates a holiday, the Early May day.

The GBP/USD pair maintains a neutral-to-bearish stance in its 4-hour chart, as despite holding above a mildly bullish 200 SMA, it continues to develop below bearish 20 and 100 SMA. The Momentum indicator in the mentioned chart remains flat within negative levels, while the RSI advances but holds within negative levels. Sellers will likely reappear on spikes beyond the 1.2400 level.

Support levels: 1.2330 1.2290 1.2250

Resistance levels: 1.2430 1.2485 1.2520  

AUDUSD

The AUD/USD pair surged to 0.6505, its highest for the week, ending the day around 0.6480. The Aussie got a boost during London trading hours from rising equities, later underpinned by the broad dollar’s weakness and resurgent gold prices. The commodity recovered to $1,720.00 during US trading hours on the back of speculation that the fed funds rate could turn negative.

Also, data released at the beginning of the day showed that the Australian trade balance posted a surplus of 10602 million in March, while the Chinese one surged to $45.34B in April, both beating the market’s expectations. The Australian AIG Performance of Services Index for April was down to 27.1 from 38.7. The Reserve Bank of Australia will release the minutes of its latest meeting this Friday.

The AUD/USD pair holds on to daily gains, offering a mildly positive stance in its intraday charts. The 4-hour one shows that the price is holding above all of its moving averages, with the 20 SMA aiming to regain the upside. Technical indicators remain within positive levels but lost part of their bullish strength. Nevertheless, the pair has room to extend its advance, particularly if it breaks above 0.6515 the immediate resistance level.  

Support levels: 0.6450 0.6405 0.6370  

Resistance levels: 0.6515 0.6550 0.6590

GOLD

Gold erased this week’s losses in a single trading day on Thursday supported by the retracement seen in the USD. On the other hand, the biggest loser of the day was the 10-year US treasury yield which was down almost 10% on a daily basis, falling from 0.717 to a low of 0.622. However, Wall Street had a positive day too alongside the daily rally seen in Gold. On a broader perspective gold can be a hedging instrument for both deflation and inflation periods. Therefore investors are eager to hold a bit portion of Gold even during risk-on periods.

Gold will put its advance on pause despite the low-interest-rate conditions should support the yellow metal. From the technical point of view, as long as Gold decisively stays over 1.700$, the resistances might be followed at 1.738$ (April double top) 1.750$(December 2012 peak) and 1.785$ (2012 multi-time peak). Below the 1.700$, the supports might be followed at 1.650$ and 1.615$.

Support Levels: 1.700$ 1.650$ 1.615$

Resistance Levels: 1.738$ 1.750$ 1.785$


SILVER

Silver trade on Thursday was supported bıth the improved risk appetite and the intraday rally seen in Gold. However, despite the strong move-up, Silver failed to break its consolidation zone which is limited with 15.55$ level. Still, the plummeted industrial demand is weighing on Silver. Therefore, the rising gap between Gold and Silver might be a good opportunity to invest in Silver for the normalization period after the pandemic ends.   

As long as Silver stays over 15.00$ levels, 15.55$ 16.33$ and 17.00$ 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: 15.55$ 16.33$ 17.00$


CRUDE WTI

WTI tried to gain higher early on Asia session supported by the positive data from China. According to Reuters' calculations based on China's General Administration of Customs' data on Thursday, oil imports rose to 10.42 million barrels per day in April from 9.68 million in March, reviving hopes of a strong recovery in energy demand as an aftermath of normalization period after the pandemic lockdown. On the other hand, Saudi Arabia announced that it increased the official selling prices for all of its crude oil grades for June and provided an additional boost to the WTI. Despite the supportive developments, WTI retraced back in the rest of the day with profit-taking pushing the price 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$ 22.00$ 20.00$

Resistance Levels: 24.00$ 24.75$ 26.00$ 


DOW JONES

Dow Jones tried to gather strength on Thursday after losing ground for two consecutive trading days. The CBOE Volatility Index, Wall Street's fear gauge, was down 7.6% on the day indicating the risk-on mood while the 10-year Treasury bond sank almost %10 on a daily basis. On the data side, weekly initial jobless claims came in at 3.17 million which is higher than the 3 million consensus estimate pushing people who filed for unemployment benefits over the last seven weeks up to 33.5 million in total. Today the NFP data set and the unemployment rate will be closely monitored as the markets are trying to position themself for a disastrous result.    

Despite the positive end of the trading day, Dow Jones failed to overcome 24.000 level on Thursday. 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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