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Daily Market Report
19 May 2020

EURUSD

Rallying equities led the way higher for EUR/USD, throughout the first half of the day, later boosted by news indicating that Germany and France have proposed an EU recovery fund of  E500 billion. According to the German’s Chancellor Merkel, the fund should give grants, no loans to member states, while France’s Macron said it would focus on help countries or regions that have been particularly affected by the coronavirus outbreak. The pair hit a daily high of 1.0919, ending it above the 1.0900 level. Earlier in the day, stocks advanced on a mixture of optimistic coronavirus-related news and US Federal Reserve chief’s Powell hinting more easing coming.

Moderna, a biotech firm, has announced encouraging results on an early-stage coronavirus vaccine trial. The next and final stage of the test could be completed by July. Hopes on economic recoveries boosted appetite for riskier assets. This Tuesday, Germany will release the ZEW Survey on Economic Sentiment for May, seen improving in the country from 29.2 to 33.5. For the whole Union, the indicator is seen at -12.1 from 25.2 in April.

The EUR/USD is trading at its highest in almost two weeks, holding on to its bullish potential in the short-term. The 4-hour chart shows that it has accelerated north through all of its moving averages, which remain directionless. Anyway, the sharp buying volume skews the risk to the upside. In the mentioned chart, technical indicators head firmly higher well into positive ground, nearing overbought levels. As long as buyers defend the downside around 1.0890, the pair has chances of nearing the 1.1000 critical threshold.

Support levels:  1.0890 1.0860 1.0820

Resistance levels: 1.0920 1.0950 1.0985

USDJPY

The USD/JPY pair advanced intraday to 107.50 but settled at around 107.35 amid the broad dollar’s weakness. The pair surged ever since the day started, as, during the Asian session, Japan published its Q1 Gross Domestic Product, which showed that the economy contracted by 0.9% in the three months to March, and by 3.4% when compared to the first quarter of 2019. As it happens with other economies, the setback is expected to deepen further amid the ongoing coronavirus crisis which holds back consumer spending and economic activity.

In the meantime, Wall Street soared, with the DJIA up roughly 1,000 points amid optimism over a coronavirus vaccine. Also, US Treasury yields advanced, with the yield on the benchmark 10-year note surging to 0.72%. During the upcoming session, Japan will publish March Industrial Production, seen down by 3.7% in the month and declining by 5.2% when compared to a year earlier. The country will also release Capacity Utilization for the same month seen at -0.2%.

The USD/JPY pair trades in the 107.30 price zone, hovering around the 23.6% retracement of its latest bullish run, after bottoming last week around the 61.8% retracement of the same rally. The short-term picture is neutral-to-positive, as the pair would need to break above 107.70 to become more attractive to bulls. The 4-hour chart shows that the pair topped around a directionless 200 SMA while developing below the shorter ones, as technical indicators hold directionless within positive levels.

Support levels: 106.90 106.65 106.30

Resistance levels: 107.70 108.00 108.40

GBPUSD

The GBP/USD pair kick-started the day gapping lower, to trade as low as 1.2098. BOE’s Governor Haldane comments over the weekend, and Brexit jitters weighed on Pound, although risk appetite smashed the dollar in the second half of the day, sending the pair back to the 1.2200 region. BOE’s Haldane said during the weekend that the central bank is looking for options alongside or beyond negative rates, which alongside the lack of progress in Brexit talks, maintained the upside limited for GBP/USD.

The UK will release this Tuesday employment data. The number of people seen filing for unemployment in April is seen at 150K, while the ILO unemployment rate is seen up to 4.4% from 4.0% in the three months to March. Earnings over the same period are expected to have contracted marginally.

The GBP/USD pair is hovering around the 1.2200 level after hitting a daily high at 1.2227. It has shrugged off the bearish stance, although the pair remains far from bullish, trading a few pips above a critical Fibonacci support level at 1.2170. In the 4-hour chart, the pair is just above a still bearish 20 SMA, although far below the larger ones. The Momentum indicator is entering positive territory, while the RSI has lost its bullish potential, now at around 47.

Support levels: 1.2170 1.2130 1.2095  

Resistance levels: 1.2230 1.2265 1.2300

AUDUSD

The AUD/USD pair has climbed steadily ever since the day started, to reach a daily high of 0.6518, holding nearby as the US session comes to an end. The Aussie found support in rallying oil prices and gold prices, with the first underpinned by news indicating that Chinese oil demand is almost back to pre-virus levels. Gold, on the other hand, soared to fresh multi-year highs as central bankers continued to hint additional stimulus measures likely in the near future. The substantial rally in US equities resulting in broad dollar’s weakness, maintained the pair rallying in the last trading session of the day. Early Tuesday, the RBA will publish the Minutes of its latest meeting.

The AUD/USD pair is heading towards 0.6569, the high posted in April. The short-term picture supports a continued advance, as, in the 4-hour chart, technical indicators maintain their bullish slopes near overbought readings. Additionally, the pair has settled above all of its moving averages, which head higher with uneven strength. Beyond the mentioned monthly high, the next relevant resistance is the 0.6600 level, with a break above this last opening the doors for a continued advance during the upcoming sessions.

Support levels: 0.6480 0.6455 0.6420

Resistance levels: 0.6530 0.6570 0.6600

GOLD

The latest rally was seen in Gold which was intact for four consecutive trading days faded on Monday as the risk sentiment made a U-turn. The positive results announced by Moderna, one of the leading biotech companies working on a coronavirus vaccine, on its first human trials triggered the risk rally pushing Wall Street higher. On the other hand, The USD index DXY retraced back below 100.00 level and limited Gold’s losses. Before the risk sentiment made a turn, Gold tested 1.765$ level which is printed as its highest level in 7 years.

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 finally started to capitalise the risk sentiment as hopes of normalization emerged. While the global economies are planning re-opening, news about a possible positive result for the coronavirus vaccine lifted the risk assets on Monday. It has been a long time since while Gold prices retreat, Silver had strong gains on the markets. The divergence also pushed the Silver to Gold ratio lower on Monday. While the expectations of a normalization in demand side, also due to lack of mining activity, Silver supply is short these days.    

Silver retraced back 17.00$ level on Monday after testing 17.56$ which was seen in the beginning of March last time. 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$

DOW JONES

Wall Street started the day with a bullish gap supported by the positive news about test results of coronavirus vaccine. Earlier in the day, Moderna, one of the leading biotech companies in the race for developing a coronavirus vaccine, announced initial results from first human tests were possible. The news pushed Moderna’s shares almost %20 on a daily basis. Indicating the positive mood, the CBOE Volatility Index was down nearly 10% on Monday. On the other hand, Powell’s comments also supported the risk rally in equity markets. Powell clearly stated that FED is open to any kind of support to the US economy. On Tuesday and Thursday, Powell’s testimonies will be closely followed by the markets.     

The index tested levels last seen in mid-March on Monday. If the index continues to stay below the 24.000 level, 23.500 and 23.000 levels might be seen as new targets. 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


OIOIOILLL

As the expiry date of the June contract for WTI comes closer, the black gold kept its rally intact over the positive developments about the coronavirus vaccine. On the other hand, falling stock levels and extra production cut measures supporting the oil prices combined with the rising risk appetite. As the re-opening of the economies takes place, the International Energy Agency (IEA) offered an upbeat outlook on global oil markets in its monthly oil market report. Reflecting the positive look, reports suggesting that China's oil consumption has already recovered to pre-virus levels further helped market sentiment improve. Although all the indicators look positive for oil, a possible dispute between the US and China as the tension is escalating might limit the advance of oil prices.    

Below the 31.00$ level, 27.40$ (9th of March dip) can be followed as the first target down as well as 26.00$ (February 2016 dip) and 25.00$ (2001-2016 support line). Above the 31.00$ level, 32.79$ (9th of March decline %38.20) and 34.45$ (9th of March decline %50.00) can be followed as resistances.

Support Levels: 31.00$ 27.40$ 26.00$

Resistance Levels: 32.79$ 34.45$ 36.12$ 


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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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