Contact Us:  

Daily Market Report
18 May 2020

EURUSD

The EUR/USD pair finished Friday at around 1.0820, unchanged weekly basis. The greenback strengthened against other major high-yielding assets, but lost against those considered safe havens, as US data released on Friday was quite disappointing. Retail Sales in the country fell by 16.4% in April, worse than the -12% expected and the largest slump on record. The preliminary estimate of the Michigan Consumer Sentiment Index beat expectations, printing 73.7 in May vs. 71.8 in April. In Europe, the EU Q1 GDP met expectations, contracting by 3.8% while the German economy contracted by 2.2% in the three months to March, also in line with the market’s forecast.

Meanwhile, the market’s sentiment continues to toss and turn on the back of the pandemic-related developments. The epicentre has moved to the Americas, while Europe slowly returns to life, learning to live with the disease. Hopes that economies will recover remain, although the possible time-frame on when that may occur continues to be unclear. As usual, the week will start in slow motion in the data front, without market-moving data scheduled in the EU and the US.

The EUR/USD has been unable to attract speculative interest these last few days, now offering a  neutral-to-bearish perspective in its daily chart. It was unable to recover above a mild-bearish 20 SMA, which caps the upside around 1.0850, while technical indicators stand flat right below their midlines. In the 4-hour chart, the risk skews to the downside, as the pair settled below all of its moving averages, which anyway lack clear directional strength. Technical indicators, in the meantime, hold within negative levels, the Momentum heading south and the RSI directionless. A relevant support level is 1.0720, with a break below it exposing the yearly low at 1.0635.

Support levels:  1.0760 1.0720 1.0680

Resistance levels: 1.0820 1.0850 1.0890

USDJPY

The USD/JPY pair eased within range on Friday, anyway holding on to weekly gains. The pair heads into the weekly opening just above the 107.00 level, weighed by dismal US data, although with the slump limited by firmer equities. US indexes settled near their daily highs but closed the week in the red, undermined by comments from the Federal Reserve’s head, Jerome Powell, dismissing chances of going into negative rates.

By the end of the week, Japan published the April Producer Price Index, which was down in the month by 1.5%. The annual reading came in at -2.3%, worse than anticipated. The country will start the week publishing the preliminary estimate of Q1 Gross Domestic Product, with the economy expected to have shrunk by 1.2% in the three months to March.

The daily chart for the USD/JPY pair shows that it’s trading around a flat 20 DMA but well below the larger ones. Technical indicators, in the meantime, head nowhere just below their midlines. The pair is neutral-to-bearish and would need to recover above 107.70 to have a chance of recovering ground. In the shorter-term, and according to the 4-hour chart, the pair is unable to provide directional clues, trading between mild-bearish moving averages, as technical indicators turn lower just above their midlines. The main support is 106.65, the 61.8% retracement of its latest daily advance.

Support levels: 106.90 106.65 106.30

Resistance levels: 107.30 107.70 108.00 

GBPUSD

The GBP/USD pair closed the week sharply lower, a handful of pips above the 1.2100 level and at its lowest since last March. The UK didn’t release macroeconomic data, but Sterling got hit by Brexit-related headlines, as the UK and the EU, both reported a deadlock in Brexit talks. UK’s chief Brexit negotiator David Frost said that the stalemate was the result of EU’s demand on a level playing field.  There’s one more round of talks scheduled in June.

During the weekend,  Andrew Haldane, Bank of England's Governor, said that “there are other options beyond that, or alongside that, that we're looking at as well,” when referring to negative interest rates. He also discussed the use of QE, although he later clarified that he was not implied policymakers are poised on any of those options. The UK will release at the beginning of the week the May Rightmove House Price Index.

The GBP/USD pair has broken below the 38.2% retracement of its 1.1409/1.2647 rally, at 1.2170, and is at risk of extending its slump. In the daily chart, the picture is bearish, as technical indicators have accelerated south well into negative territory, while the 20 SMA has turned south above the current level, now converging with the 23.6% retracement of the mentioned rally. In the 4-hour chart, the pair is firmly bearish, with technical indicators maintaining their bearish strength despite being in oversold levels. The 50% retracement of the mentioned rally comes at 1.2025, the next relevant support.

Support levels: 1.2095 1.2060 1.2025

Resistance levels: 1.2130 1.2170 1.2215

AUDUSD

The AUD/USD pair put an end to a five-week winning streak, ending this last one in the red at 0.6413. The Aussie was undermined on Friday by mixed Chinese data as Fixed Assets Investment fell in April by 10.3%, while Retail Sales in the same month plunged by 7.5% YoY. Industrial Production, on the hand, increased by 3.9% YoY in April, beating the market’s expectation of 1.5% and bouncing from -1.7%. The dollar’s broad strength maintained the pair under pressure, despite firmer gold prices and rallying equities. The macroeconomic calendar will remain empty at the beginning of the week.

The AUD/USD pair is gaining bearish strength, according to the daily chart, as it settled below its 20 DMA, while the larger ones head south above the shorter one. Technical indicators have accelerated south, maintaining their strong bearish slopes but within neutral levels. In the shorter-term, and according to the 4-hour chart, the bearish case is firmer, given that the 20 SMA is crossing below the 100 SMA, both providing resistance at around 0.6460. Technical indicators, in the meantime, remain well below their midlines, with the Momentum heading firmly lower and the RSI directionless around 40. Chances of a steeper decline will increase on a break below 0.6370, a strong static support level.

Support levels: 0.6400 0.6370 0.6325

Resistance levels: 0.6420 0.6460 0.6510  

GOLD

Gold hit its highest level in seven years on Friday as the tensions between the US and China started to escalate. However, despite the Gold run, also Wall Street and the USD continued their move up with marginal gains. The US stated on Friday that they are moving to cut Huawei off from its global list of chip suppliers as it covers a big portion of the Chinese manufacturer’s activity. Also, White House trade advisor Navarro stated that firms must manufacture in the US in order to sell in the US. On the other hand, the markets were celebrating phase one deal of the trade wars before the pandemic. About the deal, Larry Kudlow (Director of the Economic Council in the US) said that the trade deal with China is absolutely not falling apart. The markets are not willing to buy the recovery of the pandemic but at the same time, the traders are willing to secure themselves for a worsening dispute between the US and China. On Tuesday and Thursday, Powell’s testimony will be followed by the markets while on Wednesday, the interest rate decision from the People's Bank of China’s will be followed.

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 kept its strong move up on Friday alongside Gold and pushed the Gold to Silver ratio to its lowest level in 2 months. Silver is offering a big opportunity for a rally as the extreme liquidity is dominating the markets. Also, if the industrial demand will have a V shape recovery after the pandemic, the Gold to Silver ratio will most likely return to normal at a fast pace.  

After the big decline from mid-17.00$, Silver is again on a bull run instead of a recovery move. Both psychological and %50.0 of 14.29$-19.64$ level, 17.00$ is still the first target to break for a move up. Above this level, 17.60$ (%38.20 14.29$-19.65$) and 18.38$ (%23.6 14.29$-19.65$) can be targeted. On the downside, the supports can be seen at 16.33$ (%61.8 14.29$-19.65$), 15.55$ (%76.40 14.29$-19.65$) and 15.00$ levels.

Support Levels: 16.33$ 15.55$ 15.00$

Resistance Levels: 17.00$ 17.60$ 18.38$

CRUDE WTI

The June contract for WTI pushed higher on Friday hitting its highest level since mid-March. The possibility of an increase in demand as re-opening of global economies in progress is pushing the oil prices along with voluntary production cuts made by the OPEC members. As the June contract will expire on Tuesday, WTI Jun futures (CLM0) have around 85 million barrels outstanding with three more trading days before expiry, compared with 149 million barrels at this stage in the May futures (CLK0). Also, after the latest bull run, before the contract ends profit-taking might occur this week. China reported increased refinery runs. The US stockpiles witnessed a drawdown while Oman and Nigeria joined Saudi Arabia, Kuwait and UAE for voluntary oil output cuts. 

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 Friday on the back foot supported by the dismal US data and rising tensions between the US and China. On the data side, the Retail Sales in April declined by a record pace of 16.4%. Also, Industrial Production fell by 11.2% in April following March's fall of 4.5%. Reflecting the risk-off atmosphere, the CBOE Volatility Index, Wall Street's fear gauge, was up nearly 6% on the day. Despite the change in risk sentiment, Dow Jones managed to end the day on a positive note but on a weekly basis, the index failed to keep its advance. President Trump keeps raising his voice over China and Chinese companies despite the phase-one deal is intact. While the US Commerce Department bans Huawei from exporting technology from the US. Also, White House trade advisor Navarro stated that firms must do their manufacturing activities in the US in order to sell in the US. As the death toll keeps rising in the US, the rest of the world is getting ready for re-opening of their economies with easing the lockdown measures. However, fear of a second wave is still intact and therefore, the investors are in a cautious mode betting on Gold at the same time. FED’s Powell’s speeches will be followed on Tuesday and Thursday in the US in a relatively weak data week.

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


MACROECONOMIC EVENTS

Do you have any questions?

Our Customer Services team is here to help you.

Get in touch 24 hours a day, 5 days a week:

 

* 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.

All News & Analysis provided by:

Disclaimer: NCM Investment is a subsidiary and service provider of Amwal International Investment Company. The material contained here does not contain (and should not be construed as containing) investment advice or an investment recommendation, or, an offer of or solicitation for, a transaction in any financial instrument. NCM Investment accepts no responsibility for any use that may be made of these comments and for any consequences that result. This communication must not be reproduced or further distributed. All information in this publication has been compiled from publicly available sources that are believed to be reliable; however, we cannot guarantee the accuracy of all information. All information and documentation associated with this report have been produced for the purposes of providing the report only.

Please remember that trading financial markets carry a high degree of risk to your capital. It is possible to lose more than your initial stake. Leveraged products may not be suitable for all investors, therefore please ensure you fully understand the risks involved and seek independent advice if necessary.

All Rights Reserved © NCM Investment