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Daily Market Report
15 May 2020

EURUSD

The greenback stands victorious across the FX board for a second consecutive day. The EUR/USD pair fell to 1.0774 and closed the day some 10 pips above the level. The dollar surged on the back of comments from US President Trump, who stated that “it’s a great time to have a strong US Dollar.” His words coupled with plummeting equities, still suffering the echoes of Fed’s Powell latest statement, as he said that the US Central Bank has no plans to take rates below zero, and noted that policymakers are aware of the risks of a steeper economic downturn.

Market players ignore macroeconomic data. Still, Germany published its April inflation figures, with the monthly CPI rising by 0.4%, and the annual reading printing at 0.8%, both meeting the market’s expectations. The Wholesale Price Index, however, plunged, down by 3.5% when compared to a year earlier. The US has just released Initial Jobless Claims for the week ended May 8, which resulted at 2.98 million, worse than the 2.5 million expected.

This Friday, growth will be in the spotlight as Germany will publish the preliminary estimate for Q1 GDP, seen at -2.2% from 0.0% previously, while the EU will also release its GDP for the three months to March, foreseen at -3.8%. The US will publish the preliminary estimate of the Michigan Consumer Sentiment Index for May, foreseen at 68 from 71.8 previously, and April Retail Sales, seen down by 8.6% in the month.

 The EUR/USD is trading at the lower end of its latest range, slowly grinding higher. Nevertheless, the pair remains within familiar levels and with no clear sign of an imminent breakout. The 4-hour chart shows that it is trading below all of its moving averages, while the Momentum indicator heads firmly lower within negative levels. The RSI, in the meantime, consolidates around 38, all of which maintains the risk skewed to the downside. Further declines are to be expected on a break below 1.0760, the immediate support.

Support levels:  1.0760 1.0720 1.0680.

Resistance levels: 1.0830 1.0865 1.0890

USDJPY

Demand for the greenback helped USD/JPY to recover some ground, with the pair settling just below a daily high of 107.32. It came back from a daily low of 106.77, a level reached during Asian trading hours as local share markets edged lower. The recovery came mid-London session, following comments from US President Trump boosting the greenback, later underpinned by Wall Street trimming intraday losses.

Japan published at the beginning of the day the preliminary estimate of April Machine Tool Orders, which plunged to -48.3%. March figure was revised to -40.7%, slightly better than the previous estimate of -40.8%. Early Friday, Japan will publish the April Producer Price Index, foreseen at -0.9% in the month, and down by 1.6% when compared to a year earlier.

The  USD/JPY pair has met sellers around the 23.6% retracement of its latest daily advance, but it has also shrugged off its negative bias. The 4-hour chart shows that it´s now just above a flat 20 SMA, also above the 100 SMA. Technical indicators have turned north, with the RSI currency at 58 but the Momentum below its mid-line. The bullish potential seems limited, yet the recovery from near a critical Fibonacci support level suggests limited selling interest around the pair.

Support levels: 106.90 106.65 106.30

Resistance levels: 107.70 108.00 108.40 

GBPUSD

The GBP/USD pair fell to 1.2181, its lowest in over a month. Bank of England’s Governor Bailey hit the wires this Thursday, and reckon the UK is in a “major downturn,” and that uncertainty remains high. Late Wednesday, he said that the central bank can help the nation to overcome the extra debt piled during the current coronavirus crisis. The UK didn’t release relevant macroeconomic data on Thursday, and the macroeconomic calendar will remain empty this Friday.

Meanwhile, the UK remains in lockdown, despite PM Boris Johnson announced a plan to ease it on Sunday. In these last four days, PM Johnson has been trying to clarify whether or not people should return to work, when and how, yet, at the same time, warned about the danger of a second peak. Fears of a second wave of contagion hitting the UK and sending it back to strict lockdown, weigh on the Sterling.

 The GBP/USD pair is down for a fourth consecutive day, trading near the 38.2% retracement of the latest bullish run at 1.2172. The short-term picture supports additional declines, as, in the 4-hour chart, the pair is developing well below all of its moving averages, and with the 20 SMA heading firmly lower below the larger ones. Furthermore, technical indicators remain near daily lows, with the Momentum maintaining its downward slope and the RSI hovering around 35. Renewed selling interest below the mentioned Fibonacci support should keep the pair under pressure throughout Friday.

Support levels: 1.2170 1.2130 1.2095

Resistance levels: 1.2220 1.2265 1.2310  

AUDUSD

The AUD/USD pair paid little attention to Australian data, depending on the greenback strength or weakness once again. Australia reported its April employment data at the beginning of the day, which showed that 594,300 jobs’ positions were lost. The unemployment rate increased to 6.2%, better than the 8.3% expected, although the participation rate fell to 63.5%. The sour tone of worldwide equities weighed on the pair, partially offset by rising commodities’ prices.

Australia won’t publish macroeconomic data this Friday, but China will report April Industrial Production, seen up by 1.5%, and Retail Sales for the same month, expected to have declined by 7%, after falling by 15.8% in March.

The AUD/USD pair is down for a fourth consecutive day, trading at around 0.6435 ahead of the Asian opening. The short term picture indicates that the pair could extend its decline during the upcoming sessions, as the pair has settled below its 20 and 100 SMA, with the shorter one gaining bearish strength above the larger one. Technical indicators are within negative levels, the momentum heading lower and the RSI consolidating around 42. The pair bottomed at 0.6403 this Thursday, with a break below the 0.6400 figure probably confirming another leg south.

Support levels: 0.6400 0.6370 0.6325

Resistance levels: 0.6475 0.6510 0.6550 

GOLD

The risk appetite vanished in the markets as Powell highlighted his gloomy outlook on the economy in general. Powell clearly stated his and FED’s reluctant state over negative rates and also said that the damage done to the labour market might be permanent. On the other hand, rising tensions between the US and China more and more suppresses the risk appetite as the US is heading through the general elections in upcoming November. The USD index managed to hold over 100.00 level while Gold tested its highest level in almost a month. On Friday, Industrial Production (YoY)(Apr) and Retail Sales (YoY)(Apr) data sets will be followed in China which might trigger another risk flow for Gold.

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 is trying to close the gap with Gold as with the move on Thursday, Gold and Silver ratio declined almost %1. Despite Silver’s muted state lately, with the production activity going back to normal, the demand for the white metal will most likely soar. Therefore Silver still gives a chance to invest for the mid-term. On the other hand, the level of the USD index DXY might be followed closely as the historic data shows that USD rally periods usually indicate weak Silver trading.

Silver finally managed to break over the cap of the consolidation range on Thursday. The first support stands at 15.55$ level (14.29$-19.64$ %76.40) which was the previous resistance. Below this level, the next targets can be followed at 15.00$ and 14.29$ (May 2019 dip). Over the 16.33$ (%61.8 14.29$-19.65$) level, the resistances can be followed at 17.00$ and 17.60$ (%38.20 14.29$-19.65$) levels.

Support Levels: 15.55$ 15.00$ 14.29$

Resistance Levels: 16.33$ 17.00$ 17.60$ 


CRUDE WTI

WTI is still trying to improve its advance, eager to end the week in a positive tone. While the markets started to receive reports indicating a decline in stockpiles, also extra production cut measures taken by OPEC members supported the latest bull run alongside re-opening of the global economies. The IEA surprisingly offered an upbeat outlook on the global oil markets, stating, “the outlook for global oil markets has 'improved somewhat'. The report also highlighted that global oil demand is seen a little stronger-than-expected.    

The June contract for WTI is now testing a very important level for a breakout higher after the catastrophic May contract price action which saw negative levels for the first time in history. 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 managed to shift the day as the index started the day decisively on a negative print. However, the index managed to turn the tide despite all the negative events and news. Powell’s and FED’s reluctant attitude against the negative rates in the US pushed the banking sector stocks on Thursday. Earlier in the day, US President Donald Trump repeated that they will not renegotiate the phase-one of the trade deal with China. Trump further noted that his administration is looking for options to possibly seek financial compensation from China for withholding information about coronavirus as President Trump is already looking for a victim to support him in the upcoming elections in November. On the other hand, the data published by the US Department of Labor revealed that there were 2,981,000 claims for unemployment insurance in the week ending May 9th. This reading came in worse than the market expectation of 2.5 million and weighed on the sentiment. On Friday, the preliminary Michigan Consumer Sentiment Index(May) will be followed 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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