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Daily Market Report
11 May 2020

EURUSD

The EUR/USD pair finished the week in the red around 1.0840, unchanged on Friday, following the release fo the US April Nonfarm Payroll report. According to it, the US lost 20.5 million jobs in April, slightly better than anticipated, while the unemployment rate jumped to 14.7% from 4.4%. Average hourly earnings skyrocketed, distorted by furloughed low-income workers throughout the lockdown.

Easing tensions between China and the US, as representatives from both countries resumed trade talks and vowed to keep phase one alive underpinned the market’s sentiment. Also, easing restrictive measures related to the coronavirus lockdowns helped to lift the mood, despite the possible risk of a second wave.  The macroeconomic calendar has nothing relevant to offer this Monday.

The EUR/USD pair is neutral-to-bearish as the daily chart shows that sellers rejected an attempt to advance around a mild-bearish 20 DMA. The larger moving averages maintain their bearish slopes above the shorter ones, while technical indicators lack directional strength within negative levels. In the shorter-term and according to the 4-hour chart, the technical picture is quite alike, as the pair is developing within directionless moving averages, while technical indicators hover around their midlines without directional strength.

Support levels:  1.0790 1.0755 1.0710

Resistance levels: 1.0865 1.0900 1.0940

USDJPY

The USD/JPY pair settled in the 106.60 region last Friday, down for a second consecutive week. The pair traded as low as 105.98, its lowest in almost two months mid-week, slowly grinding higher afterwards, helped by an improving market’s mood. By the end of the week, Japan released Labor Cash Earnings for March, which increased by 0.1% when compared to a year earlier, missing the market’s expectations. Overall Household Spending in the same period decreased by 6.0%. Also, the Jibun Bank Services PMI plunged to 21.5 in April after printing 33.8 in March. Early Monday, the Bank of Japan will publish the Summary of Opinions report, which includes inflation’s and growth’s projections.

The daily chart for the USD/JPY pair shows that the upside has been limited by a daily descendant trend-line coming from April’s high at 109.37, now providing resistance at around 106.90. In the mentioned time-frame, the 20 DMA heads firmly south just above the mentioned trend-line, while technical indicators remain within negative levels, directionless. In the 4-hour chart, the pair has managed to settle above a mild-bearish 20 SMA but holds below the larger ones, as technical indicators consolidate just above their mid-lines.

Support levels: 106.30 106.00 105.65  

Resistance levels: 106.90 107.30 107.70

GBPUSD

The GBP/USD pair has managed to post a modest advance by the end of the week but was unable to fully reverse previous losses, ending it the red just above the 1.2400 level. The UK has become the new epicentre of the coronavirus outbreak in Europe, amid PM Johnson’s initial “herd immunity” strategy that proved wrong. The kingdom entered a lockdown too late, and this Sunday, Johnson is expected to announce the government’s plan to unlock the UK economy in stages. Ramping up testing is still an unsolved issue in the UK ahead of a slow return to normal. The UK won’t release macroeconomic data at the beginning of the week.

The daily chart for the GBP/USD pair shows that it has briefly pierced the 23.6% retracement of its latest bullish run at 1.2350, but held above it at the end of the week. In the mentioned time-frame, the pair is below a flat 20 DMA, while technical indicators hover around their midlines, lacking directional strength. In the 4-hour chart, the pair has failed to overcome its 100 SMA but remains above the 20 and 200 SMA. Technical indicators lost bullish strength after entering positive ground, indicating limited buying interest around the pair.

Support levels: 1.2390 1.2350 1.2310

Resistance levels: 1.2430 1.2485 1.2520  

AUDUSD

The AUD/USD pair advanced within familiar levels last week, ending it above the 0.6500 level. By the end of the week, the pair was unable to extend gains, as weaker gold prices offset substantial gains in equities.  Nevertheless, commodity-linked currencies were among the best performers these days, helped by growing optimism related to economic reopenings. Australian PM Morrison has announced last Friday plans to reopen the economy, aiming to complete it by July. The number of coronavirus cases in Australia has been decreasing to some 20 contagions per day. The week will start slowly in the macroeconomic front, as Australia won’t release macroeconomic data until next Tuesday.

The AUD/USD pair is bullish according to the daily chart, trading just a few pips below a bearish 100 SMA, which continues to cap advances. A bullish 20 SMA provided support throughout the week, while technical indicators head north within positive levels. In the shorter-term, and according to the 4-hour chart, the risk is also skewed to the upside, as despite losing upward momentum, technical indicators remain within positive levels and far above their midlines. Moving averages, in the meantime, remain below the current level with uneven bullish strength.   

Support levels: 0.6490 0.6450 0.6405

Resistance levels: 0.6550 0.6590 0.6620

GOLD

As the business activity is getting back to its routing globally, the risk appetite put Gold and the USD under pressure on Friday despite the historic NFP data reading. The Nonfarm Payrolls (NFP) report showed that the Unemployment Rate in the US jumped to 14.7% in April with more than 20 million Americans losing their jobs. As the markets were ready for this reading counting on the weekly initial jobless claims, the reaction was limited to change the market sentiment. The USD index DXY retreated to 99.00 level while Wall Street printed almost %2 gain on a daily basis. On the other hand, reports indicating that the US and China will stick to phase-one deal regarding the trade wars supported the risk sentiment as the world's two leading economies had a dispute over the origin of the coronavirus pandemic last week. This week the investors will follow the inflation data set in the US as well as retail sales and consumer sentiment index. Also, China will release its industrial production and retail sales data readings on Friday which also might affect Gold trading.

Despite the retracement, Gold managed to protect its 1.700$ level last Friday. 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

Despite the retracement seen in Gold, with the renewed market optimism, Silver managed to advance on Friday confirming its potential upside in the normalization period. Re-opening of the global economies created a positive mood on the markets amid official figures indicate a slowdown in the pandemic. The current mood of the market indicates an expectation of a V shape recovery in the economic activity. Therefore, due to the Gold-Silver ratio still being close to its historic highs, silver might give an opportunity to invest in for the mid to long term.

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

The June contract for WTI ended the week with almost %30 gains supported by the renewed optimism amid re-opening of global economic activity. The Trade Balance data from China, which showed a sharp increase in oil imports and a smaller-than-expected build in US crude oil stocks this week indicated the return of the economic activity supporting the oil prices. On the other hand, the weekly data published by Baker Hughes revealed that the number of active oil and gas rigs in the US fell to an all-time low of 374 in the week ending May 8th. Commenting on the data, "the great coronavirus de-rigging kicked off mid-to-late in the first quarter, impacting well starts across the major US oil shale plays," analysts at Enverus Rig Analytics told Reuters.

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

Much awaited depressive jobs report did not stop the investors on Friday and Wall Street extended its advance with the hopes of re-opening of the global economic activity. The data published by the US Bureau of Labor Statistics showed that Nonfarm Payrolls in the US declined by more than 20 million in April. Moreover, the Unemployment Rate surged to 14.7% from 4.4% in March. However, the fact that the NFP reading was better than expected allowed the market sentiment to remain upbeat. Also, the US-China trade negotiators pledging support for the phase-one trade deal supporters the risk sentiment on Friday. Reflecting the positive market mood, Gold and the USD index retreated while the equity markets kept their advance. The inflation data set in the US, as well as retail sales and consumer sentiment index, will be followed int the US this week. Also, China will release its industrial production and retail sales data readings on Friday.  

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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