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Daily Market Report
15 Jun 2020

EURUSD

The US Federal Reserve’s economic outlook has continued to take its toll on financial markets on Friday. Risk-aversion was seen throughout most of the day and cooled down just modestly ahead of the close. It’s not that the Fed has been extremely dovish, but policymakers indicated unprecedented levels of uncertainty over the economic future. In this scenario, the American dollar got to recover against its high-yielding rivals, with the EUR/USD pair falling to 1.1212 to settle in the 1.1250 region. Ahead of the close, the US released the preliminary estimate of the Michigan Consumer Sentiment Index, which bounced in June to 78.9 from 72.3, beating the market’s expectation. The figures brought some relief to market players.

This Monday, the EU will publish the April Trade Balance, expected to print a seasonally adjusted surplus of €22.9 B. As it happens with data from the dates of lockdown, it would probably have no effect on currencies. The US, on the other hand, will publish the NY Empire State Manufacturing Index for June, seen at -30 from -48.5 in May, and TIC Flows from April.

From a technical point of view, the EUR/USD pair is in a corrective wave, as it has settled just below the 236% retracement of its latest daily advance at 1.1270. The 38.2% retracement of the mentioned rally comes at 1.1175 providing static support. In the daily chart,  the pair continues to develop above a firmly bullish 20 DMA, while technical indicators have eased from overbought levels, but remain close to their recent highs, in line with the ongoing bearish correction. Shorter-term, and according to the 4-hour chart, the pair has settled below a now flat 20 SMA, while technical indicators settled near oversold levels. A bearish case will be firmer once below the mentioned 1.1175.

Support levels:  1.1215 1.1175 1.1120

Resistance levels: 1.1270 1.1310 1.1350  

USDJPY

The USD/JPY pair edged higher on Friday after falling for four consecutive days, ending the week around 107.35. The pair bottomed in the 106.50 price zone before recovering alongside US indexes. Wall Street closed in the green, recovery some of the ground lost after Thursday’s collapse. Also, US Treasury yields edged modestly higher as the week came to an end with the yield on the benchmark 10-year note settling at 0.71%, a sing of easing risk-aversion.

Japan’s data published by the end of the week reflected the extent of the economic downturn suffered within the ongoing pandemic, as the BSI Large Manufacturing Conditions Index came in at -52.3 in Q2 after printing at -17.2 in the previous quarter. Also, Industrial Production in the country fell by 9.8% in April and was down by 15% when compared to a year earlier. Capacity Utilization in the same month fell by 13.3%. The country will release the April Tertiary Industry Index this Monday, previously at -4-2% MoM.

The USD/JPY pair is trading around the 23.6% retracement of its latest daily decline, and the daily chat shows it has returned to levels below all of its moving averages, which anyway remain directionless. Technical indicators, in the meantime, lost their bearish strength after crossing into negative territory, now lacking directional strength. In the shorter-term, and according to the 4-hour chart, the pair corrected oversold conditions, although technical indicators turned south around their midlines, while the pair barely stands above a bearish 20 SMA, somehow suggesting buyers remain side-lined.

Support levels: 106.90 106.55 106.20  

Resistance levels: 107.70 108.10 108.45

GBPUSD

The GBP/USD pair fell to 1.2473, its lowest for the week, as UK data came in much worse than expected. According to the official GDP monthly estimate, the local economy shrank a record 20.4% in April, while the CB Leading Index in the same month contracted 2.9% to 86.5. Finally, Industrial Production in the mentioned period plunged 20.3% MoM and 24.4% YoY. BOE’s Governor Bailey hit the wires on Friday, and he was much more optimistic than macroeconomic numbers, as he said he sees some signs of recovery in most recent gauges of the economy, although adding that the UK is still “very much in the midst of this,” referring to the coronavirus-related crisis. The UK won’t release macroeconomic data at the beginning of the week.

The GBP/USD pair recovered from the mentioned low as the dollar eased with Wall Street’s bounce, ending the day around 1.2540. The daily chart shows that the pair has settled between its 200 and 100 SMA, while the 20 SMA continues heading higher below the current level. Technical indicators ease within positive levels, all of which indicate easing buying interest. In the shorter-term, and according to the 4-hour chart, the bearish potential is limited as the pair bounced from a bullish 100 SMA, while technical indicators began to recover from oversold readings. The 20 SMA, however, has turned lower above the current level. GBP/USD would need to recover above 1.2590 for the bearish case to lose potential.

Support levels: 1.2470  1.2420 1.2380

Resistance levels: 1.2590 1.2630 1.2685  

AUDUSD

The AUD/USD pair closed the week in the red, unchanged daily basis on Friday at 0.6865. The Aussie was weighed by the ruling risk-averse sentiment, bottoming against its American rival at 0.6799, from where it later recovered. The main driver was the latest US Federal Reserve decision on monetary policy, triggering a sell-off in global equities, as the central bank suggested that there’s a long way ahead for an economic recovery. Wall Street managed to close in the green, helping the pair to bounce ahead of the close.

Australia won’t release data early Asia, but China will publish Retail Sales and Industrial Production figures, both from May and seen improving from the previous monthly readings.  

The daily chart for the AUD/USD pair is showing that technical indicators have turned flat well above their midlines after correcting extreme overbought conditions, as it continues to develop above a bullish 20 SMA. This last, advances above the larger ones, all of which maintain the risk skewed to the upside. In the shorter-term, and according to the 4-hour chart, the pair has settled between a bearish 20 SMA and a bullish 100 SMA, this last providing support at around 0.6780. Technical indicators, in the meantime, remain within negative levels, although turning higher, somehow limiting the bearish potential.

Support levels: 0.6780 0.6745 0.6710

Resistance levels: 0.6890 0.6935 0.6980

GOLD

The risk sentiment stayed mixed on Friday as Wall Street faced a technical correction after the heavy sell-off last week while Gold also found a balance after being rejected at 1.740$ multiple times. Fed’s gloomy outlook for the future of the economy in the US combined with fears of a second wave in the coronavirus pandemic triggered a flight to safety. On the other hand, the US Secretary Mnuchin said on Thursday that another relief package is needed and that the economy can’t be shut down again in case of the second wave of the pandemic. At this point, investors are willing to buy the aftermath of the pandemic with a cautious mood as demand for Gold stays intact. This week the macro-data calendar will kick-off with retail sales and industrial production data sets from China which will give the traders an indication of a global recovery. Later in the week, Fed’s Powell will testify on Tuesday, Wednesday and Friday which will be followed closely. Also, the retail sales data on Wednesday in the US 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 once again negatively diverged from Gold trade and slid below 17.60$ on Friday while Gold managed to print marginal gains. Fundamentally, the Fed’s ultra-dovish monetary policy should support Gold in the long run which will likely to support Silver as well. On the other hand, Silver’s industrial demand will likely to boost prices as production is going back to normal at a slow pace. 

Technically speaking, after the recovery rally from the dip at 11.65$, Silver has two different consolidation zones. The lower one is between 16.97$ and 17.60$ while the upper zone is between 17.60$ and 18.38$. As 16.97$ (%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

WTI failed to test the 37.00$ level on Friday after the heavy sell-off on last Thursday. The weekly data published by Baker Hughes Energy services showed on Friday that the number of active oil rigs in the US declined to its lowest level since June 2009 at 199 and helped the WTI to protect its gains. The recovery in WTI is dependent on two factors at this point. The production cut agreements and recovery in global economies as the lockdowns are being eased. As OPEC+ agrees on the extension of production cuts, there are indications of a gradual rise in demand across the globe.

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

Dow Jones tried to recover from the heavy sell-off seen on last Thursday. Risk aversion started to dominate the markets with a surprising move as fears of the second wave in pandemic kicked in the markets along with Fed’s gloomy look on the US economy. Reflecting the depressive mood, the VIX ‘fear gauge’ has just come off its largest surge over a week since the end of February. This week will be an important one in terms of verbal guidance by the Fed as Powell will have statements on Tuesday, Wednesday and Friday. Also, the retail sales data in the US will be followed by the investors as an indicator of the damage done to the economy. As the traders worry about a possible second wave of the coronavirus pandemic although the first wave is far from over in the US, the US Secretary Mnuchin said on Thursday that another relief package is needed and that the economy can’t be shut down again in case of the second wave of the pandemic.

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


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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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