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Daily Market Report
14 May 2020

EURUSD

After starting the day with a soft footing, the greenback ends Wednesday up against all of its major rivals. The American currency got a boost from words from the Federal Reserve’s head, Jerome Powell. In a private event and when responding to questions, Powell state that US policymakers are not looking at negative rates as a possible monetary policy. "The Fed intends to continue using tools it has already tried," Powell noted, adding that FOMC participants are against them. The EUR/USD pair retreated from a fresh weekly high of 1.0880 to settle in the 1.0810 price zone.

In the data front, the EU has published March Industrial Production data, which fell by 11.3% in the month and by 12.9% when compared to a year earlier. The US, on the other hand, has just released the April Producer Price Index, which fell by 0.3% MoM and by 1.3% when compared to a year earlier, missing the market’s expectations. This Thursday, Germany will publish April inflation data, seen up by 0.8% YoY, unchanged from March. During the American afternoon, the focus will be on US weekly jobless claims, seen up by 2.5M.

The EUR/USD has remained within familiar levels, overall neutral. The 4-hour chart shows that a directionless 200 SMA continued to cap advances, with the pair now hovering around an also flat 20 SMA. Technical indicators, in the meantime, have turned lower, although they remain stuck to neutral levels. Bears could have better chances on a break below 1.0790, a strong static support level, although it seems unlikely that the pair could extend its decline far below this last during the upcoming sessions.

Support levels: 1.0790 1.0755 1.0720

Resistance levels: 1.0890 1.0920 1.0950

USDJPY

The Japanese yen strengthened against its American rival for most of this Wednesday, with USD/JPY bottoming at 106.73. The pair recovered with Fed’s Powell comments, although the advance was moderated by plummeting equities, which prevented the pair from recovering sharply, now struggling to recover beyond the 107.00 level.  The fact that Chief Powell mentioned significant downside risks to the economy related to the current pandemic-related crisis weighed on US Treasury yields, which closed the day with losses.

At the beginning of the day, Japan published its March Trade Balance, which posted a surplus of ¥103.1B much worse than anticipated, although the Eco Watchers Survey showed that the outlook improved to 16.6, while the assessment of the current situation rose to 7.9, both beating expectations. Early Thursday, the country will release the April Producer Price Index, seen down by 0.9% MoM and by 1.6% YoY.

The  USD/JPY pair is trading below the 38.2% retracement of its latest daily advance at 107.08, after nearing the 61.8% retracement of the same decline at 106.65. Technical readings in the 4-hour chart favour a downside extension for the upcoming hours, as the pair is now developing below its moving averages, the Momentum heading lower and the RSI stable around 48. Below the mentioned Fibonacci support the pair will likely accelerate its decline towards the 106.00 figure.

Support levels: 106.90 106.65 106.30

Resistance levels: 107.70 108.00 108.40 

GBPUSD

The GBP/USD pair surged intraday to 1.2339 but ended up collapsing to 1.2209 afresh monthly low. The UK macroeconomic figures came in mixed, as Manufacturing Production plunged by 4.6% in March, while Industrial Production declined by 4.2%, both better than anticipated, although still indicating a steep contraction. Same happened with economic growth, as the UK economy contracted 2.0% in the three months to March, better than the -2.5% expected. The Goods Trade Balance, in the meantime, posted a deficit £ 12.508 B in March, much worse than anticipated. The later decline of the pair was the result of the resurgent dollar’s demand. The UK won’t release macroeconomic data this Thursday.

 The GBP/USD pair has closed in the red for a third consecutive day, a handful of pips above the mentioned low. The pair has turned bearish short-term, as the 4-hour chart shows that it plunged well below a bearish 20 SMA, after a failed attempt to advance above it. Furthermore, the 100 SMA is below the 200 SMA, both above the shorter one. Technical indicators, in the meantime, have bounced modestly from near oversold levels, but remain within negative levels. The main support is now the 1.2170 price zone, where the pair has the 38.2% retracement of its latest daily advance.

Support levels: 1.2200 1.2170 1.2130

Resistance levels: 1.2265 1.2310 1.2355   

AUDUSD

The AUD/USD pair was unable to retain its early gains, ending a third consecutive day in the red at around 0.6440. Australian data released at the beginning of the day was most encouraging, as the Westpac Consumer Confidence Index for May came in at 16.4%,  much better than the previous -17.7%. Also, wages’ growth matched the market’s expectations in the first quarter of the year, up by 0.5% in the three months to March and by 2.1% when compared to a year earlier.

Australia will release April employment data this Thursday. The country is expected to have lost 575,000 job positions in the month, a result of the coronavirus-related lockdown. The unemployment rate is seen soaring to 8.3% from 5.2% in the previous month. The country will also publish Consumer Inflation Expectations for May, previously at 4.6%.

The AUD/USD pair has spent the last hours consolidating losses and seems poised to extend its decline. In the 4-hour chart, the pair continues to find support around a bullish 100 SMA, although the 20 SMA is gaining bearish strength above the current level. Technical indicators, in the meantime, stand within negative levels lacking clear directional strength. Dismal employment data has been already priced in, although a much worse-than-expected report could be the catalyst for a bearish move.

Support levels: 0.6405 0.6370 0.6325

Resistance levels: 0.6475 0.6510 0.6550 

GOLD

Gold supported by Powell’s speech on Wednesday as FED chairman stated a gloomy outlook on the economy. With a cautious tone, Powell stated that the economic path is highly uncertain and subject to significant downside risks. However, the fact that Powell's prepared remarks did not mention the subject of negative rates which seemed to disappoint investors betting that the central bank will push interest rates below sub-zero levels next year. While the US treasury yields continue to decline, the USD index DXY advanced it moved up over 100.00 level. On the other hand, President Trump is still trying to escalate the tensions between the US and China by extending the executive order aimed at Huawei and ZTE (Chinese companies).

Gold continued its advance through a strong resistance zone around the 1.720$ level which was tested a couple of times since mid-April despite the positive look seen in the USD. 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 almost erased its losses made on Tuesday alongside the advance seen in Gold. Like the other industrial metals like Copper which peaked to its seven-week high, Silver also boosted by the hopes of re-opening of global economies after a long pause caused by the coronavirus pandemic. Silver trade will most likely be driven by the indıstrial demand expectations, therefore, any positive data reading about the industrial output or a resolution of the pandemic will likely trigger a rally in Silver prices to close the gap against Gold.

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 is still holding its ground after a series of sessions with inclines. The latest bull run was supported by hopes of an incline in demand as re-opening of global economies started to take shape. Also, additional production cut measures taken by gulf countries supported oil prices after a chaotic period with oversupply. In its monthly report, OPEC reduced its forecast for 2020 crude demand by 2.23 million barrels a day from its April projection, now expecting oil demand to drop by 9.07 million barrels a day this year. What has also rattled the market is the revision of non-OPEC liquids production down by a "huge" 2 million barrels a day from its previous assessment. A 3.5 million barrel a day decline in non-OPEC production to an average 61.5 million barrels a day in 2020 is a major hit for the market, for both upstream and downstream participants, especially in North America. However, the outlook and forecasts were made for worldwide production, including Canada (300,000 barrels a day), Brazil (100,000 barrels a day). On the data side, Commercial crude oil inventories in the United States decreased by 0.7 million barrels in the week ending May 8th, the Energy Information Administration (EIA) announced on Wednesday. This reading came in lower than the market expectation for an increase of 4.1 million barrels.  

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

Dow Jones started the day with a bearish gap with a move triggered by Powell’s depressive outlook on the economy. Powell stated that the FOMC's view on negative rates has not changed and reiterated that it's not something the Fed is looking at. Highlighting the uncertainty in the markets, Powell also added that the situation is the worst since WWII and the duration of the economic recession can extend to two years. On the other hand, the tensions between the US and China continues to brew as White House trade adviser Peter Navarro said China should pay for its role in spreading the coronavirus stating that China inflicted tremendous damage on the world which is still ongoing, and even suggested that the US could impose new tariffs or to walk away altogether from the phase one deal that had put a milestone down within a bitter 18-month battle between the world's two largest economies and roiled markets. 

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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