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Daily Market Report
18 Jun 2020

EURUSD

The EUR/USD pair is down for a second consecutive day, trading around 1.1230 as the day comes to an end after posting a daily low of 1.1206. The market’s positive sentiment faded as the day went by, amid a continued increase in coronavirus cases in some US states that tempered positive macroeconomic data. The shared currency was among the weakest, as the annual CPI in the Union came in at 0.1%, as expected, although the lowest reading in years. Construction Output in the EU fell by 14.6% in April, after shrinking by 15.7% in the previous month.  

The US, on the other hand, has just published Building Permits, which rose by 14.4% in May after falling by 21.4% in the previous month. Housing Starts in the same period rose by 4.3% up from -26.4% in the previous month. This Thursday, the macroeconomic calendar will remain light, as the most relevant report to be out is the weekly Initial Jobless Claims for the week ended June 12, foreseen at 1.3 million.

The EUR/USD pair broke below the 23.6% retracement of its latest daily advance, but so far holds above the 38.2% retracement, this last at 1.1170. The 4-hour chart shows that a bullish 100 SMA provided intraday support, currently at 1.1205, while a bearish 20 SMA converges with the 23.6% Fibonacci level. Technical indicators, in the meantime, hold within negative levels, the Momentum aiming marginally higher, and the RSI flat at around 38.

Support levels: 1.1205 1.1170 1.1120

Resistance levels: 1.1270 1.1310 1.1350  

USDJPY

The USD/JPY pair ended is trading near a daily low of 107.05, lower in range this Wednesday. Equities traded marginally higher in the US, while government bond yields held around their Tuesday’s closing level, yet that was not enough to cap the yen. Comments from US Federal Reserve Chief Powell in his second day of testimony before the Congress, also failed to trigger some action, despite he pledged to do more if more needs to be done.

Early Wednesday, Japan released its May Merchandise Trade Balance, which posted a smaller-than-expected deficit of ¥-833.4 B.  Imports plunged by 26.2% while exports decreased by 28.3%, both below the market’s expectations. The country won’t release relevant macroeconomic data this Thursday.

The USD/JPY pair is trading below the 23.6% retracement of its latest daily decline but within familiar levels. In the 4-hour chart, it’s currently trading below all of its moving averages, with the 20 SMA converging with the mentioned Fibonacci level. Technical indicators head lower within negative levels, anticipating additional declines ahead, particularly if the pair breaks below 106.95, the immediate support level.

Support levels: 106.95 106.60 106.25

Resistance levels: 107.35 107.80 108.20  

GBPUSD

The GBP/USD pair has extended its latest decline to 1.2510, a fresh weekly low, as market players have lost interest in high-yielding assets. The UK published the Consumer Price Index for May, which came in at 0.5% YoY, meeting the market’s forecast, although core annual inflation missed expectations by printing at 1.2%. The Producer Price Index was also worse than anticipated in the same month.

In the Brexit front, PM Johnson said that, when they come to the end of the Brexit transition period, they will be able to respond to the UK's economic needs in a “creative way.” Johnson also said that they are concerned about the impact of the pandemic on the economy.

This Thursday, the Bank of England will end its monetary policy meeting and announce MPC’s decision. The market is expecting policymakers to keep rates on hold for a unanimous decision, although the Assets Purchase Facility Program is expected to increase to £745 B from the current £645 B, after two out of nine voting members voted for a £100 billion QE expansion. Market players will also be looking for any other possible toll to be used to keep the economy afloat.

The GBP/USD pair is hovering around 1.2540, neutral-to-bearish in the short-term. The 4-hour chart shows that the pair continues to trade below a mild-bearish 20 SMA yet above a bullish 100 SMA. The Momentum indicator hovers around its midline, while the RSI stands at 43, skewing the risk to the downside. The pair bottomed last week at 1.2453, and a break below the level should signal a steeper decline ahead.

Support levels:  1.2505 1.2450 1.2410

Resistance levels: 1.2605 1.2650 1.2695  

 

AUDUSD

The AUD/USD pair has spent the day consolidating just ahead of the 0.6900 figure, with the bullish potential limited by mixed Australian data released at the beginning of the day. The May Westpac Leading Index improved to 0.19% from -1.47% in the previous month. HIA New Home Sales fell in April by 4.2% after printing -1.1% in the previous month. Meanwhile, most global indexes posted modest intraday gains, limiting chances of a decline.

This Thursday, Australia will release May employment data. The country is expected to have lost 125K job positions, an “improvement” from the previous -594.3K. The unemployment rate is foreseen ticking higher to 7% from 6.2% in April, while the participation rate is foreseen at 63.7%.

The AUD/USD pair is trading around 0.6890, neutral-to-bullish ahead of the all-important employment report. The 4-hour chart shows that it has spent the day above a flat 20 SMA, while the larger moving averages head higher below the current level. Technical indicators have turned modestly lower, the Momentum within positive levels, while the RSI is in neutral levels. The risk of a bearish extension would be linked to a negative surprise from employment figures and a break below 0.6840, a strong static support level.

Support levels: 0.6875 0.6840 0.6795

Resistance levels: 0.6935 0.6980 0.7020

GOLD

Gold kept its status quo on Wednesday amid rising tensions between South and Korea alongside China and India. While the tensions between South and North Korea escalated by cutting the communication, at least 20 Indian soldiers were killed in a clash with Chinese forces in a disputed Himalayan border area, Indian officials say. On the other hand, coronavirus cases continue to rise in the USA as the economy re-opens. Risk sentiment remained “cautiously optimistic” with a mixed picture at Wall Street while the USD index DXY managed to tick over 97.00 level. Jerome Powell, Chairman of the Federal Reserve System stated on his testimony on Wednesday that it is important that pandemic unemployment benefits are continued in some form after they are due to expire. He also added that the Fed plans to keep its foot on the gas until it is sure the US is on road to recovery and The Fed is not thinking about raising rates, that the economy will need support for an extended period of time. In the long run, the Fed’s current monetary policy will likely support Gold with high liquidity and low interest rates.

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 tested key level on Wednesday in an uneventful trading day. The U.S. Federal Reserve has recently promised to buy individual corporate bonds while the recent U.S. Retail Sales report was much better than expected, boosting demand for riskier assets limiting Gold’s and Silver’s advances. Also, as the USD index, DXY managed to hold over 97.00 level, the move also pressured precious metals. Gold/silver ratio has recently tried to settle above 100 but fell below this level signalling a normalisation in silver prices compared to Gold. In March, Gold was 127 times more expensive than Silver while at the start of June, Gold was 95 times more expensive than Silver. The long-term average of the gold/silver ratio is around 60, so, there is more room for Silver prices to outperform Gold prices which might take time.

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, the resistances are lined at 17.60$ (%38.20 14.29$-19.65$), 18.38$ (%23.6 14.29$-19.65$) and over that 18.70$.

Support Levels: 16.97$ 16.33$ 15.55$

Resistance Levels: 17.60$ 18.38$ 18.70$


CRUDE WTI

WTI had a narrow range trading day on Wednesday while another rise in US crude stocks reported. The US weekly crude inventories data which showed a build of stocks by 1.2 mln bls, which is above forecast for 0.1 mln bls build but well below last week’s 5.7 mln bls rise while the sentiment was weak and oil price was descending since release of API report late Tuesday which showed a build of 3.9 mln bls and added to market concerns of extended build in crude stockpiles, despite recovery of demand and discipline among producers. WTI is trying to find balance as the rally lost steam around the 40.00$ level.

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 kept its foot down trying to hold over 26.000 level. Powell did not surprise investors during testifying before the House Financial Services Committee on Wednesday mainly focusing on the labour market. Also, he stated that the Fed plans to keep its foot on the gas until it is sure the US is on road to recovery and The Fed is not thinking about raising rates, that the economy will need support for an extended period of time. He also added, the current high savings rate in the US shows there is a lot of spending power, which bodes well for the next few months. The USD index managed to lift over 97.00 level While Wall Street, in general, had a mixed day.

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 while a steady close over 25.667 (21.712-29.585 %50) will most likely to carry Dow Jones to 26.000, 26.577 (21.712-29.585 %38.200) and 27.000 levels.

Support Levels: 25.000 24.719 23.500 

Resistance Levels: 26.000 26.577 27.000


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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