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Daily Market Report
12 May 2020

EURUSD

The EUR/USD pair eased within range, nearing the 1.0800 level during US trading hours and holding nearby heading into the Asian session. The American currency is up against all of its major rivals, particularly strong against commodity-linked ones, as US indexes struggle to post some intraday gains. The market’s mood was mostly optimistic at the beginning of the day, focused on economic reopenings, although the enthusiasm faded throughout the day. The macroeconomic calendar was quite scarce, with no relevant data released in the US or the EU.

On Tuesday, the Union won’t publish macroeconomic data, but the US will publish April inflation data. The annual CPI is seen up by 0.8% well below the previous 1.5%. The core figure is foreseen at 1.7% from 2.1% in the previous month. Meanwhile, market players will continue to focus on economic reopenings and the health developments in this new “normal.”

The EUR/USD pair has posted a lower low and a lower high daily basis, offering a neutral-to-bearish stance in the short-term. The 4-hour chart shows that the pair has spent much of the last session struggling around a mild-bearish 20 SMA, while below a flat 100 SMA. The Momentum indicator remains flat around its 100 line, while the RSI heads marginally lower at around 40, in line with the increased bearish potential.

Support levels:  1.0790 1.0755 1.0710

Resistance levels: 1.0865 1.0900 1.0940

USDJPY

The USD/JPY pair surged to  107.76, its highest in over two weeks. The pair was underpinned at the beginning of the day by rising equities, later maintaining the positive momentum on the back of renewed dollar’s demand and higher US Treasury yields. These last surged on mounting hopes about economic reopening. The yield on the US 10-year note settled at a daily high of 0.72%. The pair maintained the positive by the end of the day, as Wall Street recovered after a soft start to the day.

The Bank of Japan released its Summary of Opinions, which reflect policymakers’ concerns about an economic contraction, pledging to “act decisively” to avoid a second Great Depression.  This Tuesday, Japan will publish April’s Foreign Reserves, and the preliminary estimate of the March Leading Index, seen bouncing from 91.7 to 91.9.

The  USD/JPY pair hovers near the mentioned daily high as the new day starts, bullish according to the 4-hour chart, as its currently advancing above the 200 SMA for the first time since mid-April. Also, the pair is now developing well above its 20 and 100 SMA, with the shorter one gaining bullish strength. Technical indicators in the mentioned time-frame have reached overbought levels, now consolidating at their daily highs. The current 107.70 has proved strong in the past, which means that further gains above it should signal a steeper recovery ahead.

Support levels: 107.30 106.90 106.50

Resistance levels: 108.00 108.40 108.75

GBPUSD

The GBP/USD pair trades at around 1.2330 after falling to 1.2282 during US trading hours. UK PM Johnson spoke on Sunday on how the UK will continue from here.  His message was confusing, as he actively encouraged to return to work those workers that can’t work from home, but also urged people to stay at home if possible. Staring this Wednesday, people would be allowed to take unlimited outdoor exercise and sit in parks, although foreign visitors to the UK will have to be on quarantine for 14 days at arrival. Later in the day, he added that the government won’t hesitate in returning to extreme measures and that different parts of the UK may need to remain in full lockdown for longer.

Meanwhile, Brexit talks resumed ahead of June decisive summit. So far, the UK has reiterated that they won’t ask for an extension beyond December this year, even in the case the EU requests them to. EU’s chief negotiator Barnier has said that talks so far have been disappointing, with no progress made. The UK won’t release relevant macroeconomic data this Tuesday.

The GBP/USD pair is trading below a Fibonacci level at 1.2355, the immediate resistance. In the 4-hour chart, the pair is now developing below all of its moving averages, with the 20 SMA heading lower below the larger ones, indicating increasing selling interest. Technical indicators lack directional strength, the Momentum around its mid-line and the RSI at 43, skewing the risk to the downside.

Support levels: 1.2310 1.2275 1.2230

Resistance levels: 1.2355 1.2390 1.2420 

AUDUSD

The AUD/USD pair peaked at 0.6560 but ended the day in the red around 0.6480, weighed by the sour tone of equities. Crude oil prices attempted to advance a couple of times throughout the day, but even after Saudi Arabia announced a voluntary cut of 100K barrels per day. Spot gold also eased, nearing $1,690 a troy ounce. Australia will publish this Tuesday the April NAB´s Business Confidence index, previously at -66. China will offer an update on inflation, with the CPI seen down by 2.6% YoY in April.

The AUD/USD pair retains its positive bias despite ending the day in the red. The 4-hour chart shows that it’s battling with a mild-bullish 20 SMA but holding above the larger ones, as technical indicators corrected overbought conditions to consolidate near neutral levels. Better than anticipated Australian data will likely boost the pair back above the 0.6500 figure, while only below 0.6445, the daily low, the risk will turn to the downside.

Support levels: 0.6445 0.6405  0.6370

Resistance levels: 0.6520 0.6550 0.6590  

GOLD

While many countries are easing the lockdown rules, markets were mostly quiet on Monday as most of the assets tried to protect their grounds. On the other hand, the aftermath of the pandemic is still uncertain as the damage done to the global economy is intense and also tensions between the US and China will most likely escalate due to the origin of the coronavirus pandemic. As the election in the US is approaching, Trump might want to use this tension to increase his popularity, therefore, rising tensions can be followed as a new risk event on the markets despite the general risk appetite is willing to cheer return to normal. Despite the latest move-up in the equity markets, Gold is willing to hold it’s 1.700$ waving around the important level. 

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 also spent the day almost virtually not changed as the markets were in a wait and see mode. Despite the lazy trading mode, many investors are convinced that sooner or later as the global economic activity returns to normal, the Gold and Silver ratio will return to normal levels after hitting all-time highs back in March. Almost 50% of Silver demand comes from the industrial sector especially the communication, the car and solar power industry. These industries have been heavily affected by the coronavirus pandemic which has also exposed Silver to the economic effects of coronavirus. Therefore, any positive development regarding the pandemic will most likely support silver prices.

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 looks to find a balance around mid-25.00$ level after hitting mid-26.00$ zone on Monday. The move up in the second half of the day was supported by OPEC+ producers and announced additional output cuts. Saudi Arabia's energy ministry said that it has directed Saudi Aramco to lower the oil output by an additional one million barrels per day (BPD). Moreover, the United Arab Emirates and Kuwait followed suit by cutting their productions by 100,000 and 80,000 BPD, respectively, to balance the oil market. WTI is looking for extra catalysts to continue its move after the historic price crash last April. The black gold at least managed to recover through levels last seen after the first sell-off amid coronavirus panic.

The first support is watched at 25.00$ level. 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: 25.00$ 24.75$ 17.05$

Resistance Levels: 30.00$ 33.17$ 36.20$


DOW JONES

Wall Street started the new trading week on a cautious note after gaining more than %3 last week. While the CBOE Volatility Index, Wall Street's fear gauge, was up more than 10% on a daily basis while the USD index DXY pushed 100.00 level again. As the re-opening of major economies creates a positive mood, fear of a second wave of the pandemic is limiting the risk appetite along with a possible tension between the US and China regarding the origin of the coronavirus pandemic. Data-wise, the inflation data set in the US and China will be followed by the traders on Tuesday.    

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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