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Daily Market Report
16 Jun 2020

EURUSD

The week started with investors in risk-off mode, amid growing concerns of a second wave of coronavirus contagions, and as protests continue in the US. The country has reported almost 9,500 new cases in the last 24 hours, while there are 16,700 critical cases in the country. Also, China put at least ten cities in strict lockdown amid a new outbreak of COVID-19. Asian shares were sharply lower, while European ones also closed in the red, although off daily lows. The greenback benefited just modestly from the dismal mood, with EUR/USD falling to 1.1226. The pair recovered within US trading hours, as Wall Street trimmed losses and rallied into the green, as the Fed will begin buying corporate bonds to support the market’s liquidity.

 In the data front, the EU released the April Trade Balance, which posted a seasonally adjusted surplus of €1.2 B, much worse than the anticipated €22.9 B. The US, on the other hand, has just released the June NY Empire State Manufacturing Index, which came in at -0.2, much better than the expected -27.5 and improving from -48.5 in May. This Tuesday, the attention will be on the June German ZEW Survey, as the Economic Sentiment in the country is seen improving to 60 from 51 in the previous month. The US, on the other hand, will publish May Retail Sales, seen up by 8.0% after printing at -16.4% in April.

The EUR/USD pair trades in the 1.1320 price zone as the day comes to an end, above the 23.6% retracement of its latest daily advance. The short-term picture still shows a limited bullish potential, as, in the 4-hour chart, it is moving above a bearish 20 SMA, while technical indicators advance, although the RSI around 55 and the Momentum still within negative levels. Friday’s daily high comes at 1.1350, the immediate resistance, with a retest of the recent high at 1.1422 becoming more likely once above the level. Bears seem to have to wait, as the pair is closer to retest its recent highs than of breaking lower.

Support levels: 1.1300 1.1260 1.1215

Resistance levels: 1.1340 1.1385 1.1420

USDJPY

The USD/JPY pair has spent the day hovering around 107.30, the 23.6% retracement of its latest daily slide. Attempts to regain the upside were contained by selling interest around 107.50, where the pair set its daily high. The pair fell to 106.99 amid fears about a second wave of coronavirus, which boosted demand for safe-haven assets. The macroeconomic calendar was light, as Japan published this Monday the April Tertiary Industry Index, which came in at -6.0% from -4.2% in the previous month. Despite equities bounced during US trading hours, the pair was unable to advance.

This Tuesday, the focus will be on the Bank of Japan monetary policy meeting. The central bank is expected to maintain its rates on hold and pledged to keep on controlling the yield curve. Policymakers may decide to increase the size of its loan program, but given that there was no certain limit announced when it was launched, it may have a limited surprise effect on the yen.

The USD/JPY pair is entering the Asian session trading around the mentioned Fibonacci level, offering a short-term neutral stance, according to the 4-hour chart. The Momentum indicator heads modestly higher within positive levels, with limited bullish strength, while the RSI indicator hovers around 47. The price, in the meantime, was unable to advance beyond a flat 200 SMA but holds above the 20 SMA, which also lacks directional strength. The pair would need to advance beyond 107.80, the 38.2% retracement of the mentioned decline, to turn bullish.

Support levels: 106.95 106.60 106.25

Resistance levels: 107.80 108.20 108.50  

GBPUSD

The GBP/USD pair is ending the day with gains just below the 1.2600 figure, although it posted a lower low and a lower high daily basis, a sign that bulls are still hesitating. Instead, the advance could be attributed to the easing dollar’s demand alongside Wall Street recovering from intraday lows. Limiting the Pound, the UK and the EU confirmed that there won’t be an extension to the Brexit transition period. Both parts are aware that “new momentum” is required in Brexit talks, but good intentions seem not enough to convince market players.

The UK macroeconomic calendar was empty this Monday, but on Tuesday, the kingdom will publish its latest employment data. The ILO Unemployment rate for the three months to April is seen at 4.5% from 3.9% previously, while the number of unemployed people is foreseen at 370K after hitting 856.5K in the previous month.

The GBP/USD pair has bounced from a daily low of 1.2453, now struggling around 1.2600. The 4-hour chart shows that it met buyers again around a bullish 100 SMA, but that it has also held below a bearish 20 SMA. Technical indicators have recovered from oversold readings, but remain within negative levels. The mentioned 20 SMA comes at 1.2605, providing dynamic resistance. Overall, the downside will remain limited as long as risk-aversion persists, while the upside will likely remain capped by Brexit-related uncertainty.

Support levels: 1.2570 1.2525 1.2470   

Resistance levels: 1.2605 1.2650 1.2695 

 

AUDUSD

 The AUD/USD pair started the day with a sour tone, falling to 0.6776, its lowest since the month began, but changed course during US trading hours, to settle above 0.6920. The pair traded alongside equities, falling during Asian trading hours as indexes edged sharply lower, but advancing at the end of the day with Wall Street’s rally. Also, dismal Chinese data weighed on the Aussie, as Retail Sales in the country decreased by 2.8% YoY in May, worse than the -2.0% expected, while Industrial  Production in the same period increased by 4.4%, missing expectations of 5.0%.

This Tuesday, the AUD will present the Minutes of its latest monetary policy meeting. The document is not expected to surprise investors, but instead, repeat the latest Lowe’s message that the economic downturn is not as bad as initially estimated and that bond-buying will continue.

The AUD/USD pair has room to extend its advance during the upcoming hours, as, in the 4-hour chart, it has crossed above a still bearish 20 SMA, after finding support earlier in the day around a bullish 100 SMA. Technical indicators, in the meantime, head firmly higher above their mid-lines, as the price stands above its Friday intraday high.

Support levels: 0.6890 0.6850 0.6810

Resistance levels: 0.6935 0.6980 0.7020

SILVER

Silver slid to its lower consolidation area which is between 16.97$ and 17.60$. The sentiment shifted during the US session and Silver managed to lift-off from its lows at 16.97$. Silver continues to be more accessible to retail traders as the Gold to Silver ratio continues to create an opportunity to bet on a rally triggered by the normalisation in industrial demand. 

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 managed to pick up the pace on Monday after dipping to 34.38$ as the fears of the second wave in the coronavirus pandemic suppressed the risk appetite. Recent reports pointing out to a fresh wave of infections in China and the increasing number of cases reported in the US have spooked investors, pushed oil prices further down before the pull-up. On the other hand, British Petroleum has downgraded its 30-year oil price forecast by 27%, increasing negative pressure on oil prices. Experts from BP affirm that Brent crude prices will average $55 per barrel between 2021 and 2050, down from their previous forecasts of around $75 per barrel which also disturbed the sentiment for WTI. 

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 is trying to erase its losses made on both last Thursday and Friday after testing sub-25.000 levels on Monday. The Federal Reserve widened its program for buying corporate debts extended to minimum rating, maximum maturity and other criteria. On the other hand, Morgan Stanley stated that Wall Street might retrace further %7 due to its overbought conditions. As the US states are lifting their lockdown measures, the number of cases started to escalate creating a panic for a second wave brewing. Also, China re-introduced restrictions in some areas as Beijing reported its biggest incline in new cases since February. Powell’s statements today, tomorrow and on Friday will be closely monitored by the markets as risk events since verbal guidance is a big part of Fed’s strategy.

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

XAU

Monday was a very volatile day for Gold as the yellow metal had a sharp U-turn and tested 1.730$ after dipping to 1.700$. While the USD index DXY continued to stay under pressure below 97.00 level, Wall Street managed to print marginal gains. The retracement seen in Gold might be triggered by the retail traders who are willing to liquefy their positions in stock markets despite the fact that there is still no positive development persisting regarding the pandemic. On the other hand, the Gold price performed better than other traditional safe havens such as US Treasury bonds or JPY. Gold price made new highs for the year in April and again in May, whereas bond yields did not fall to new lows and the yen did not strengthen past its March highs.  

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$    


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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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