Daily Market Report
25 Jun 2020
The EUR/USD pair edged lower this Wednesday, undermined by renewed risk-aversion. The dismal sentiment was fueled by the continued increase of coronavirus cases in the US, as the country reported 34,700 new cases on Tuesday, the third-highest daily tally since the outbreak began. Adding to the negative sentiment, headlines indicated that the US is planning to impose tariffs in up to $3.1 B on UK’s and EU’s goods. Worldwide indexes closed in the red, with US ones falling to one-week lows.
Germany published the June IFO survey, which showed that the Business Climate in the country improved to 86.2, better than the 85 expected, with Expectations soaring from 80.1 to 91.4, but the assessment of the current situation rising less than anticipated and printing at 81.3. The US published the MBA Mortgage Applications for the week ended June 19, which plunged by 8.7%, and the April Housing Price Index, which resulted at 0.2% MoM.
This Thursday, Germany will publish the GFK Consumer Confidence Survey, foreseen at -12 for July from -18.9 in June. The ECB will publish the minutes of its latest meeting. The US has a more interesting session, as it will publish the final version of Q1 GDP, weekly unemployment figures, and May Durable Goods Orders seen rising by 10.6% after printing -17.7% in the previous month.
The EUR/USD pair is trading near a daily low of 1.1255, just below the 23.6% retracement of its latest daily advance. In the 4-hour chart, the pair is battling with its 20 SMA, which has lost its bullish strength. Technical indicators in the mentioned time-frame, head lower, the Momentum still holding above its mid-line but the RSI already below it, in line with a bearish extension towards 1.1170, the next Fibonacci support.
Support levels: 1.1225 1.1170 1.1120
Resistance levels: 1.1310 1.1350 1.1390
Demand for the greenback on a risk-averse environment has helped the USD/JPY pair to recover some ground this Wednesday, with the pair entering the Asian session trading a few pips below the 107.00 figure. The market mood turned sour as most major economies seem to be tore between hopes related to easing lockdown measures and fears of a second coronavirus wave, as cases in the US keep on rising.
Japanese data released at the beginning of the day was mixed, as the May Corporate Service Price Index came in at 0.8% YoY, below the 1.1% expected, while the April Coincident Index was downwardly revised to 80.1 from 81.5. The Leading Economic Index for the same month, however, was revised to 77.7 from 76.2. The country will publish this Thursday the All Industry Activity Index for April, previously at -3.8%
The USD/JPY pair has recovered up to the 23.6% retracement of the latest daily decline measured between 109.56 to 106.06. The bullish potential, however, seems quite limited according to intraday technical readings. In the 4-hour chart, the pair is trading a few pips above a mild-bearish 20 SMA, while still below the larger ones. Technical indicators, in the meantime, have recovered from yesterday’s lows, but remain within neutral levels. The 38.2% retracement of the mentioned decline comes at 107.50, a possible bullish target should the pair extends its current advance above 107.10.
Support levels: 106.60 106.25 105.90
Resistance levels: 107.10 107.50 107.90
The GBP/USD pair fell to 1.2415 to close the day around 1.2420, as the dollar rose on risk-aversion, while the Pound was hit by mounting concerns of a second wave of coronavirus contagions in the UK. Despite the country reported 154 deaths in the past 24 hours, UK PM Johnson announced the easing of restrictive measures and even reduced the social distancing norm to just one meter. Major health bodies for the kingdom had warned the PM against lifting lockdown measures.
The UK didn’t release macroeconomic data this Wednesday, but will publish this Thursday the CBI Distributive Trades Survey - Realized, foreseen in June at -34% from -50% in the previous month.
The GBP/USD pair is trading at daily lows and below the 23.6% retracement of the latest daily decline, which suggests further declines ahead. Technical readings in the 4-hour chart skew the risk to the downside, as the pair is barely holding above a flat 200 SMA, while below the 20 and 100 SMA. The Momentum indicator consolidates around its 100 level, but the RSI heads firmly lower, currently at around 40. A clear break below the mentioned daily low should open the doors for a retest of the monthly low at 1.2334.
Support levels: 1.2410 1.2375 1.2330
Resistance levels: 1.2490 1.2520 1.2560
The AUD/USD pair eased throughout the last few sessions, ending the American one at around 0.6870. The decline was driven by the dismal mood that took over the financial world. Global equities closed in the red, as a large increase in coronavirus contagions in the US and warnings about a possible second wave in different European countries sent investors into the dollar’s safety. Australia didn’t publish macroeconomic data this Wednesday, and its macroeconomic calendar has nothing to offer during the upcoming Asian session.
The AUD/USD pair is trading near its daily low and with the risk skewed to the downside in the short-term. The 4-hour chart shows that it has broken below its 20 and 100 SMA, both converging in the 0.6900/10 price zone, while technical indicators crossed their midlines into negative territory, maintaining their bearish slopes. A relevant support comes at 0.6809, the June 22 daily low. The decline has a limited impact on the dominant bullish trend, as long as the pair holds above the 0.6770 static support level.
Support levels: 0.6850 0.6810 0.6770
Resistance levels: 0.6925 0.6970 0.7010
Gold had a reversal on Wednesday after testing renewed its 8 years high at 1.779$ ended the day with a big Doji candle. The USD index DXY managed to lift itself over 97.00 level while Wall Street had a sell-off. At the moment Gold trade is affected by USD mostly apart from the usual risk events such as the second-wave of the pandemic. While the current low-interest rates and extreme liquidity conditions favour Gold, a decline in physical Gold demand both from end-users and Central Banks will most likely limit the advance in Gold prices. It is expected that the central banks will buy 350 tonnes, down from 646 tonnes in 2019, and industries such as electronics manufacturers will use 291 tonnes, down from 326 tonnes last year. On the other hand, Gold supply might decline by only 1% to 4,762 tonnes, leaving the market oversupplied by 690 tonnes, the seventh consecutive annual surplus and the biggest since at least 2011.
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$
While Gold managed to end the day around where it started, Silver had a sharp decline after testing 18.00$ level on Wednesday. As Gold once again outperformed silver, Gold to Silver ratio lifted over 100 level again. At this point, the 108 level in the ratio is considered as bearish for Silver. Physical Silver demand is either for jewellery production or industrial based as central banks do not keep Silver at the moment. Therefore, a clear indication of a recovery in industrial production will spark a rally in Silver due to its usage.
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$
WTI extended its move down as the inventory data sets continued to build up. The American Petroleum Institute (API) reported that their weekly crude oil stocks rose 1.749mln vs the analyst expectations of 0.300M. Today The Energy Information Administration (EIA) also confirmed the news with a 1.4mln inventory rise. The general storage levels are still above the 5-year average and currently stand at 540.7mln barrels. Also, the US crude oil refinery inputs averaged 13.8 million barrels per day during the week ending June 19, 2020, which was 239,000 barrels per day more than the previous week’s average. On the other hand, fears of the surging number of cases in the US as the lockdowns are eased fueling fears of a second wave and other extreme lockdown measures which will hit oil demand hard.
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$
As the number of new cases in the US continues to increase, panic trading sparked a heavy sell-off in Wall Street. The number of new cases increased %30 in the last seven days while some governors started mentioning new quarantine measures. On the other hand, it has been reported new measures might be taken regarding trade taxation between the US and Europe. The Trump administration is weighing tariffs on around $3.1 billion of imports from the UK, Spain, Germany and France. Also, The International Monetary Fund again cut its global economic forecast for 2020 on Wednesday, saying that the coronavirus pandemic has caused an unprecedented decline in global activity. The IMF expects a global economic contraction of 4.9%, almost two percentage points lower than three months ago. The gloomy outlook from the IMF also weighed on Wall Street.
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