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Daily Market Report
12 Jun 2020

EURUSD

The EUR/USD pair has spent this Thursday consolidating below 1.1400, falling to fresh daily lows by the end of the day below 1.1300 as risk-off dominated the financial scene. Following the US Federal Reserve monetary policy announcement on Wednesday, equities entered a selling spiral that continued throughout the different sessions. The fact that the Fed will maintain rates at current lows at least through the next two years, among other things, sounded the alarm on those thinking on a soon-to-come economic recovery. The dollar benefited to a different extent against its major rivals from this risk-averse sentiment.

The macroeconomic calendar had little to offer, as there were no data releases coming from the EU.  The US, on the other hand, published the Initial Jobless Claims for the week ended June 5, which were slightly better-than-expected, as 1.54 million Americans filed for unemployment. Continuing Jobless Claims, however, edged higher to roughly 21 million in the week ended May 29.  This Friday, the EU will unveil April Industrial Production, seen down by 20% in the month, while the US will publish the preliminary estimate of the June Michigan Consumer Sentiment Index, foreseen at 75 from 72.3 in the previous month.

The  EUR/USD pair is trading below 1.1300 as the day comes to an end, losing its bullish stance. In the 4-hour chart, it has pierced a bullish 20 SMA, which continues advancing above also bullish larger moving averages. Technical indicators have turned south, the Momentum holding within positive levels, but the RSI already below its 50 line. The decline could extend once below the 1.1300 figure towards 1.1260, a more relevant support level.

Support levels: 1.1260 1.1225 1.1170

Resistance levels: 1.1310 1.1350 1.1390 

USDJPY

The USD/JPY pair fell to 106.56 during the American session, its lowest in over a month, bouncing from the level to settle at around 106.80. The pair was hit by risk-aversion post-Fed, as the central bank painted a  long road ahead of economic recovery. Global indexes collapsed, with US indexes losing over 4.0% each, while the 10-year Treasury yield fell to 0.67%, its lowest since the month started. US President Trump rushed to Twitter to try to stop the collapse, saying that the Fed is “wrong so often,” adding that the recovery would start as soon as Q3. His words, however, fell short of reverting the slump.

This Friday, Japan will publish the BSI Large Manufacturing Conditions Index for Q2, previously at -17.2. The country will also publish April’s Industrial Production and Capacity Utilization for the same month.

The USD/JPY pair retains its bearish stance according to intraday charts, with selling interest now aligned ahead of the 107.00 level. The 4-hour chart shows that the 20 SMA keeps heading south almost vertically and that it is about to cross below the 200 SMA after piercing the 100 SMA. Technical indicators have bounced from daily lows within oversold territory but remain well below their midlines, lacking sufficient strength to suggest a sustained recovery.

Support levels: 106.55 106.20 105.90

Resistance levels: 106.95 107.30 107.70

GBPUSD

The GBP/USD pair put an end to its winning streak, closing the day int he red near a daily low of 1.2599. The Pound was dragged lower by the sour tone of  the market but Brexit woes also took their toll on the UK currency. The kingdom has up to June 30 to ask for an extension of the transition period, set to finish on December 31. UK Cabinet Minister Michael Gove hit the wires this Thursday, repeating that they won’t ask for an extension, despite the lack of progress in talks with the EU. The greenback, in the meantime, met safe-haven demand, advancing against most of its high-yielding rivals.

Friday will be a busy day in the UK macroeconomic calendar, although data is from April, and the market won’t be extremely shocked with bad numbers. The country will publish its April Trade Balance, and Industrial Production, this last seen down by 15.0% in the month. The UK will also publish its monthly GDP estimate, foreseen at -18.4%.

The GBP/USD pair is trading a couple of pips above the mentioned daily low and at risk of extending its slide during the upcoming sessions. The 4-hour chart shows that the pair is well below its 20 SMA, which slowly turns south above the 1.2700 level. Technical indicators, in the meantime, maintain their strong bearish slopes within negative levels, the RSI approaching oversold readings. The immediate support is at 1.2580, where the pair has some relevant intraday lows from early June. Once below the level, the next relevant support is 1.2500, June 4 daily low.

Support levels: 1.2580 1.2545 1.2500

Resistance levels: 1.2630 1.2685 1.2720

AUDUSD

The Australian dollar fell to 0.6838 against the greenback hurt by tepid local data released at the beginning of the day and the dismal market’s mood. Australian Consumer Inflation Expectations resulted at 3.3% in June, down from 4.2% in May. Meanwhile, equities plunged following the US Federal Reserve dovish stance, with the DJIA having its worst day in over three months. Australia won’t release macroeconomic data this Friday, while China will publish May’s Foreign Direct Investment.

The AUD/USD pair is trading near the mentioned daily low as the day comes to an end, and poised to extend its decline during the upcoming hours, particularly if equities remain under selling pressure. The 4-hour chart shows that the pair accelerated its slump once it broke below its 20 SMA, which has gyrated south. The 100 SMA maintains its bullish slope and currently stands at around 0.6770. Technical indicators, in the meantime, retain their sharp bearish slopes within negative levels, favoring a continued decline throughout the upcoming sessions.

Support levels: 0.6805 0.6770 0.6725

Resistance levels: 0.6890 0.6935 0.6980

GOLD

Gold had a very volatile day on Thursday amid a shift in risk appetite. The yellow metal reversed the intraday dip at 1.720$ and tested a multi-week high of 1.749$ level. However, as the seller emerged Gold retraced back to 1.720$ level again amid the sharp decline in Wall Street. On the other hand, the USD index DXY managed to pick up the pace and tried to test the 97.00 level. Apart from the risk events and uncertainties like the second wave of the pandemic, FED’s massive balance sheet which might hit 10 trillion USD and verbal guidance of keeping the interest rates almost zero until 2022 will create a positive environment for Gold in the long run.

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 gave back almost all of its gains on Thursday as a result of a volatile trading session. On the other hand, as the industrial demand rebounds alongside re-opening of the economies, mining activity also gained traction in May. Silver futures capped a gain of nearly 24% for the month of May which is the largest monthly gain since 2011 outperforming Gold and pushing the Gold to Silver ratio to its normal levels. On the demand side, 50% of silver demand comes out of industry and technology sectors, followed by 25% by jewellery. The rest is driven by investments in physical silver or related ETFs. Therefore, with the normalisation of industrial activity, Silver will likely to continue Gold and lower the ratio.

As 16.97$ (%50.0 14.29$-19.65$) stands as critical support, below this level, a test of 16.33$ (%61.8 14.29$-19.65$) and 15.55$ (%76.40 14.29$-19.65$) can be targeted. On the top side, over the 17.60$ (%38.20 14.29$-19.65$) resistance, 18.38$ (%23.6 14.29$-19.65$), 18.90$ (January and February peak zone) and 19.67$ (2019 peak) can be followed as targets up. 

Support Levels: 16.97$ 16.33$ 15.55$

Resistance Levels: 18.38$ 18.70$ 18.90$


CRUDE WTI

The rise in crude oil stocks and FED’s pessimistic outlook on the economic recovery pushed WTI lower on Thursday with a 8.50% decline on a daily basis. Earlier in the week, WTI failed to break 40.00$ resistance despite the agreement to extend production cut by OPEC+. On the other hand, the larger than expected build-up on oil stocks reported by the US Energy Information Administration has added negative pressure on oil. According to the EIA, oil inventories rose by 5.7 million barrels in the week of June 5, against expectations of a 1.45 million decline. Once again, fears of an oil glut, combined with a weak demand have sent prices plummeting. Alongside with demand and supply issues, fears of a second wave of Covid-19 pandemic and FED’s gloomy outlook on economic activity also pressured WTI prices.

40.56$ (65.62$-0.00$ %61.80) tested as an important resistance on Monday as WTI is decisively on its way to recovery after the plunge in April. A decisive move over 32.81$ (65.62$-0.00$ %50) might carry WTI to 40.56$ (65.62$-0.00$ %61.80), 50.00$ and 54.00 levels. Below the 32.81$ level, 31.00$, 27.40$ (9th of March dip) and 26.00$ levels can be targeted.

Support Levels: 31.00$ 27.40$ 26.00$

Resistance Levels: 40.56$ 50.00$ 54.00$


DOW JONES

Wall Street finally woke up from its dream as the reality kicked in with Powell’s depressive outlook for the USD economy. Also, the possibility of a second wave in the coronavirus pandemic which realised only today by the markets created an extra shift in risk appetite on Thursday. Powell highlighted three major issues in his speech yesterday. The problems in the labour market, decline in GDP and the extended period of zero interest rated around the globe. Due to historic data, the global financial institutions have lower earnings in low-interest-rate conditions usually. Therefore the risk appetite in Wall street shifted strongly with Powell’s statement.    

Dow Jones lost almost %7.0 on a daily basis and retraced back to the 25.000 level. Below the 25.000 level, 24.719 (21.712-29.585 %61.80) 23.500 and 23.000 levels can be followed as support levels. A steady close over 25.667 (21.712-29.585 %50) will most likely carry Dow Jones to 26.000 and 26.577 (21.712-29.585 %38.200).  

Support Levels: 25.000 24.719 23.500 

Resistance Levels: 25.667 26.000 26.577

MACROECONOMIC EVENTS

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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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