Daily Market Report
24 Jun 2020
The greenback edged lower against all of its major rivals this Tuesday, resulting in EUR/USD hitting a weekly high of 1.1348. The dollar’s slump was correlated to the positive momentum in global equities after the US government reaffirmed the US-China trade deal remains firmly in place. Also, better-than-anticipated preliminary estimates of June Markit PMIs underpinned the mood. The preliminary estimate of the EU Manufacturing PMI came in at 46.9 sharply up from the previous 39.4 and above the expected 44.5. The Services PMI printed at 47.3 against 30.5 in May. In the US, the manufacturing index surged from 39.8 to 49.6, while the services PMI recovered from 37.5 to 46.7.
The pair retreated from the mentioned high as Wall Street also pared gains and eased from its daily tops, although held into the green by the end of the day. This Wednesday, the macroeconomic calendar will be quite light, as Germany will release its IFO Survey on Business Climate for June, seen recovering from 79.5 in May to 85. The US will publish MBA Mortgage Applications and the April Housing Price Index.
The EUR/USD pair is trading above the 1.1300 mark as the day comes to an end, also above the 23.6% retracement of its latest daily advance at 1.1270. Earlier this week, the pair bottomed at the 38.2% retracement of the same rally, indicating that the pair may well retest its monthly high at 1.1422. In the 4-hour chart, the price is developing above all of its moving averages, while technical indicators have reached overbought readings before paring its advance, all of which keeps the risk skewed to the upside. The immediate resistance is the 1.1350 price zone, where the pair topped last week.
Support levels: 1.1270 1.1225 1.1170
Resistance levels: 1.1350 1.1390 1.1425
The USD/JPY pair fell to 106.06, its lowest since early May, to finish the day with losses around 106.45. The pair fell despite the solid advance in global indexes amid a generalized optimism about an economic comeback. In such a scenario, investors chose to sell the greenback. Meanwhile, US Treasury yields ticked modestly higher, with the yield on the 10-year Treasury note settling at 0.71%.
Japan released at the beginning of the day the preliminary estimate of June Jibun Bank Manufacturing PMI which, came in at 37.8, better than the 36.9 forecast but below the previous 38.4. This Wednesday, the country will publish the May Corporate Service Price Index, foreseen at 1.1% from 1.0% previously, and the Leading Economic Index for April, foreseen at 76.2 as previously estimated. The Coincident Index is also expected unchanged at 81.5.
The USD/JPY pair is stable below its former monthly low at 106.56, with room to extend its decline during the upcoming sessions. The 4-hour chart shows that its recovery above a mild-bearish 20 SMA was short-lived, now developing well below it. Technical indicators have lost directional strength, but remain at daily lows within negative territory. The pair will likely resume its decline on a break below 106.25, the immediate support.
Support levels: 106.25 105.90 105.50
Resistance levels: 106.60 107.00 107.35
The GBP/USD pair trades around 1.2515 after reaching 1.2531, as upbeat UK data coupled with a weaker dollar. Markit published the preliminary estimate of the June Manufacturing PMI, which surged to 50.1 from 40.7, and the Services PMI, which printed at 47 from 29 in May, both largely surpassing the market forecasts. Meanwhile, UK PM Boris Johnson announced easing lockdown measures starting July 4, although adding that the government will remain vigilant and can revert easing measures if needed. This Wednesday, the UK won’t publish macroeconomic data.
The GBP/USD pair is trading at its highest in a week near the mentioned daily high, maintaining a short-term bullish tone. The 4-hour chart shows that the 20 SMA provided intraday support, with the pair well above the moving average, while the 100 SMA keeps heading higher above the current level. Technical indicators in the mentioned time-frame head north within positive ground, supporting additional gains towards 1.2575, the 50% retracement of its latest daily decline.
Support levels: 1.2510 1.2465 1.2420
Resistance levels: 1.2570 1.2620 1.2660
The AUD/USD pair extended its advance to 0.6974 in the past American session, stabilizing at the end of the day in the 0.6930 price zone. Growth-related data was behind the daily advance, with upbeat PMIs from all major economies, Australia included. The preliminary estimate of the Commonwealth Bank Manufacturing PMI surged to 49.8 in June from 49.2 in May, while the services index came in at 53.2 from 25.7. Another bullish factor for the pair was gold, as the bright metal surged to its highest since 2012 on the back of the broad dollar’s weakness.
Australia won’t release macroeconomic data this Wednesday, although the New Zealand Central Bank will announce its latest monetary policy decision, which in turn, could have an impact on the Aussie.
The AUD/USD pair retains its positive tone in the short-term, although the bullish momentum faded by the end of the day. In the 4-hour chart, it is developing above all of its moving averages, with the 20 and 100 SMA heading modestly higher a handful of pips below the current level. Technical indicators, in the meantime, eased from daily highs, currently approaching their midlines. As long as the pair holds above the 0.6900 level, however, chances of a steeper decline will be limited.
Support levels: 0.6900 0.6860 0.6820
Resistance levels: 0.6980 0.7015 0.7050
Gold had another solid day testing above its seven-year high on Tuesday trading as the USD index DXY continued to lose ground sliding below 97.00 level. While the risk events as surging coronavirus cases and the escalating tensions between the US and China supporting Gold, on the other hand, Wall Street is on a positive note testing pre-pandemic levels. Also, according to Reuters, holdings in SPDR Gold Trust, the largest gold ETF in the world, rose 0.58% to 1,166.04 tonnes on Monday. this is a level not seen since April 2013. Further weakness in the USD index DXY will most likely support Gold prices even if the overall risk sentiment is pricing a strong V-shaped recovery.
Over the 1.765$ (May 2020 peak), the resistances might be followed at 1.785$ (2012 multi-time peak), 1.800$ and 1.822$ levels. Below the 1.765$, the supports can be followed at 1.750$(December 2012 peak), 1.738$ (April double top) and 1.700$.
Support Levels: 1.750$ 1.738$ 1.700$
Resistance Levels: 1.785$ 1.800$ 1.822$
Silver tested 18.00$ resistance once again on Tuesday but failed to pass the physiological level. The ongoing weakness in the USD index DXY is supporting the latest bull run both in Silver and Gold while the equity markets are trading on a positive note too. In a statement on Friday, Goldman Sachs said that gold prices would jump to $2000 in the next 12 months. In the same note, the analysts said that the silver price would hit $22 per ounce in the next three years. The Wall Street firm expects the price of silver to average $19 this year and $21 in the coming year signalling the potential upside move along with normalisation of industrial production.
As 16.97$ (%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$
WTI failed to sustain its move-up on Tuesday despite the decline seen in the USD index DXY. White House trade adviser Peter Navarro on Monday said that the trade deal with China was "over" and triggered a flight to safety. However, US President Trump quickly responded by tweeting out the agreement was "fully intact" to allow risk-on flows to start dominating financial markets. Escalating fears of a China-US trade dispute is pressuring the oil prices while promising PMI readings in the US and the Euro area is fueling hopes of a faster recovery in global energy demand.
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$
Wall Street cheered the better than expected PMI readings on Tuesday in the US which followed the upbeat data in the Euro area. The preliminary estimate of the EU Manufacturing PMI printed in at 46.9 with a sharp up from the previous 39.4 and above the expected 44.5. The Services PMI printed at 47.3 against 30.5 in May while in the US, the manufacturing index surged from 39.8 to 49.6, while the services PMI recovered from 37.5 to 46.7 signalling a faster than expected recovery might be in place. The USD index DXY retraced below 97.00 level and also precious metals gained traction on Tuesday. Adding to the positive note, St. Louis Federal Reserve President James Bullard said on Tuesday that he doesn't expect the post-pandemic economy to have a lower standard of living. Bullard added, "The bulk of the economy will return to prior production levels," and argued that the coronavirus pandemic has not turned out as bad as initially feared. Also, The US Senate Democrats roll out a $1.5 trillion infrastructure plan to help the world’s largest economy overcome 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 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