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Daily Market Report
23 Jun 2020

EURUSD

The greenback edged lower this Monday, with the EUR/USD pair hitting a daily high of 1.1269 during the American afternoon. The American dollar found some favor at the beginning of the day amid the dismal mood that kept Asian equities trading in the red throughout the session. European ones followed the lead, but the focus shifted to a continued increase in coronavirus cases in the US across the South, West, and Midwest. Wall Street, however, managed to grind higher, adding to the dollar’s weakness.

The shared currency found support in the preliminary estimate of June Consumer Confidence as it improved to -14.7 from -18.8. US data, on the other hand, was mixed, as the Chicago Fed National Activity Index for May improved to 2.61 from -17.89 in the previous month, but New Home sales plunged 9.7% in the same month.

This Tuesday, Markit will release the preliminary estimates of its June PMIs for the EU and the US. Manufacturing activity and services output is expected to have continued to recover over the month, although in all cases, the numbers are expected within contraction levels. Nevertheless, recoveries in-line with the market’s expectations will be seen as good news. The US will also publish the June Richmond Fed Manufacturing Index and May New Home Sales.

The EUR/USD pair has been trading between Fibonacci levels, finding support at around the 38.2% retracement of its latest daily advance, but unable to move beyond the 23.6% retracement of the same rally at 1.1270. The short-term picture skews the risk to the upside, as, in the 4-hour chart, the pair has managed to recover beyond its 20 SMA, although moving averages continue to lack directional strength. Technical indicators, in the meantime, re-entered positive ground with a limited bullish momentum. The bullish case will be firmer on a clear break above the immediate Fibonacci resistance level.

Support levels: 1.1225 1.1170 1.1120

Resistance levels: 1.1270 1.1310 1.1350

USDJPY

The USD/JPY pair has spent the day lifeless just below the 107.00 level, confined to a tight intraday range. It remains near its monthly low at 106.56, unable to recover despite Wall Street’s advance. The day started in slow motion, with Asian and European indexes holding within negative levels but not far below the daily openings. Speculative interest remained tore between reopening hopes and fears of a second wave of coronavirus. US indexes found support in headlines indicating that the US government is outlining its next coronavirus stimulus package that could exceed $1 trillion.

Early Tuesday, Japan will see the release of the June preliminary estimate of the Jibun Bank Manufacturing PMI, foreseen at 36.9, slightly better than the previous 38.4.

The USD/JPY pair is neutral-to-bearish in the short-term, as the 4-hour chart shows that a bearish 20 SMA capped the upside ever since the day started. The mentioned moving average has accelerated south below the larger ones. The Momentum indicator has spent the day hovering around its mid-line, while the RSI stands flat at around 44. At this point, the pair needs to break below 106.60 or advance above 107.30 to become attractive for speculative interest.

Support levels: 106.60 106.25 105.90

Resistance levels: 107.30 107.80 108.20  

GBPUSD

The GBP/USD pair has managed to recover some ground after bottoming at 1.2359, as a result of the broad dollar’s weakness and hopes UK’s PM Johnson will keep advancing with the reopening plan. The pair reached a daily high of 1.2476, finishing the day not far below this last. UK data failed to impress, despite coming in better-than-expected. The CBI Industrial Trends Survey on Orders improved to -58% in June from -62% in May, beating expectations of -59%.

Bank of England Governor´s Andrew Bailey hit the wires on Monday, and he said that the central bank would need to reduce its balance sheet before raising rates significantly, indicating that “elevated balance sheets could limit the room for manoeuvre in future emergencies.”

This Tuesday, Markit will release the preliminary estimate of the June Manufacturing PMI, foreseen at 45 from 40.7 in May, and the Services PMI, expected at 39.5 from 29 in the previous month. The improvement will be welcome despite contraction is still foreseen in both sectors.

The GBP/USD pair has settled just above the 23.6% retracement of its latest daily decline at 1.2450, an immediate support level. The 4-hour chart shows that the pair is trading a few pips above a still bearish 20 SMA, which converges with the mentioned Fibonacci level, while technical indicators stand within neutral levels, the Momentum advancing but the RSI flat. Overall, the pair seems poised to continue advancing, with a firmer bullish case once above 1.2517, the 38.2% retracement of the mentioned slide.

Support levels: 1.2450 1.2410 1.2370

Resistance levels: 1.2485 1.2520 1.2560

AUDUSD

The AUD/USD pair recovered from a daily low of 0.6809 to close this first trading day of the week above the 0.6900 level. The Aussie found support during Asian trading hours on comments from RBA’s Governor Phillip Lowe, who said that the economic downturn in Australia was not as severed as expected, praising the country from emerging pretty strong from the coronavirus crisis when compared to many other countries. Broad dollar’s weakness and gold prices nearing a multi-year high kept the pair rallying during US trading hours.

This Tuesday, Australia will publish the preliminary estimate of the June Commonwealth Manufacturing PMI, foreseen at 49.3 from 44 in the previous month. The Commonwealth Services PMI for the same period, however, is seen contracting to 25.7 from 26.9 in the previous month.

The short-term picture for the AUD/USD pair is bullish as it trades around 0.6910, heading into the Asian opening. The 4-hour chart shows that it recovered above all of its moving averages, with the 20 and 100 SMA standing in the 0.6870/90 region. Technical indicators in the mentioned time have entered positive territory, although the RSI has lost its bullish strength. Nevertheless, the risk remains skewed to the upside, with the bullish case firmer once above 0.6935, the immediate resistance.

Support levels: 0.6860 0.6820 0.6770

Resistance levels: 0.6935 0.6980 0.7015

GOLD

Gold tested its May peak at 1.764$ on Monday as seven-year high supported by the retracement seen in the USD index DXY. DXY tested 97.00 level on Monday while Wall Street had limited gains. On the other hand, the US yields edged lower on the first day of the trading week. FED’s extreme balance sheet combined with fears of a second wave in the coronavirus pandemic is pushing Gold on its course for 1.800$. Also, On Friday, Goldman Sachs hiked its forecast for Gold and estimated the metal to hit $2,000 an ounce in a year on low real interest rates, debasement fears and a weakening dollar.

1.750$(December 2012 peak), 1.785$ (2012 multi-time peak) and 1.800$ levels can be followed as resistances as Gold keeps its decisive move over the 1.700$ level. Below the 1.738$ (April double top), next targets downside can be followed at 1.700$ and 1.650$.

Support Levels: 1.738$ 1.700$ 1.650$

Resistance Levels: 1.750$ 1.785$ 1.800$


SILVER

Silver had an attempt to test 18.00$ on Monday but the white metal failed to break its resistance and retraced back a tick over its important 17.60$ level. The move was mostly supported by the decline seen in the USD while fear of the second wave in the coronavirus pandemic is forcing investors to be cautious. At this point, Silver built a very strong base at 17.00$. Due to its industrial usage, Silver is awaiting production globally to resume after a long pause caused by the pandemic to advance its move up.  

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 kept its three-day winning streak on Monday testing 40.00$ for the second time in June. The retracement is seen in the USD supporting the precious metals with oil while the risk appetite continues to be cautious. The IEA foresees the global supply-demand balance quickly shifting from a surplus to a deficit from Q2’20 to Q3’20, with global inventories dropping by around 4.5 MB/d through Q3’20 and Q4’20. On the other hand, OPEC+’s estimates were much more bullish regarding the oil demand. Also, retail trader data shows 52.45% of traders are net-long with the ratio of traders long to short at 1.10 to 1. The number of traders net-long is 12.65% higher than yesterday and 24.98% lower from last week, while the number of traders net-short is 4.71% higher than yesterday and 29.22% higher from last week signalling a mixed-bullish outlook for WTI in the short term.

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

After the sharp correction down last week, Dow Jones had a positive opening to the week while the USD index DXY lost ground. Traders continue to be optimistic although fears of a second wave in pandemic emerge as California, Florida and Texas reported record single-day rises in Covid-19. Data-wise, the Chicago Fed National Activity Index for May improved to 2.61 from -17.89 in the previous month, but New Home sales plunged 9.7% in the same month. 

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


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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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