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Daily Market Report
29 Jun 2020

EURUSD

The EUR/USD pair closed a second consecutive week just a handful of pips above the 1.1200 level, unchanged on Friday. Risk aversion remained as the main theme, as the number of new coronavirus contagions in the US reaches record highs daily basis. Demand for high-yielding assets was affected, although the dollar’s momentum was also limited. The US reported a record on 47,341 contagions on Friday, with weekend reports of above 40,000 new cases a day.

ECB’s President Lagarde offered a speech at the end of the week, and her words weren’t too optimistic. She remarked that the EU probably passed the lowest point of the crisis, but added that an economic recovery “will be a complicated matter.”  She added that the crisis is worse than the 2008 one, and expressed concerns about a second wave of COVID-19. The US published May Personal Income, which resulted in -4.2% and Personal Spending, which rose by less than anticipated, resulting in 8.2%. Core PCE beat expectations up by 1.0% YoY.

The macroeconomic calendar will be quite busy this week, starting on Monday with Germany releasing the preliminary estimates of June inflation, and the EU releasing the June Economic Sentiment Indicator, foreseen at 80 from 67.5 in May. The US will publish May Pending Home Sales and the Dallas Fed Manufacturing Business Index for June.

The EUR/USD pair traded between Fibonacci levels for a second consecutive day, holding above the 38.2% retracement of its latest daily advance at 1.1170, the immediate support. In the daily chart, the pair is developing below its 20 DMA, while technical indicators turned flat around their midlines, leaving a neutral stance. In the shorter-term and according to the 4-hour chart, the risk is skewed to the downside, as the pair trades below its 20 and 100 SMA, while technical indicators hold within negative levels, lacking clear directional strength. A break below 1.1170 is required to confirm a bearish extension.

Support levels: 1.1170 1.1125 1.1080

Resistance levels: 1.1270 1.1310 1.1350  

USDJPY

The USD/JPY pair managed to hold above the 107.00 level at the end of the week, ending it with modest gains around 107.20. The pair was once again trapped between collapsing equities and demand for the greenback amid markets in a risk-off mood. US indexes closed in the red, losing over 2.0% each, while government debt yields plunged. The yield on the benchmark 10-year Treasury note settled at 0.64%, its lowest for the week.

At the end of the week, Japan published Tokyo June inflation at the beginning of the day, which came in at 0.3% YoY, well below the 0.6% expected, although the core reading, which excludes fresh food, met the market’s expectations at 0.2%. This Monday, the country will release May Retail Trade, foreseen at -11.6% from -13.9% previously. Large Retailers’ Sales for the same month are foreseen at -11.7% after printing at -22.1% in April.

The USD/JPY pair is bearish according to the daily chart, as it has spent the week below all of its moving averages. The 20 SMA heads south around the 38.2% retracement of the latest daily slump at 107.50, the immediate resistance. Technical indicators, in the meantime, remain within negative levels without clear directional strength. In the shorter-term, and according to the 4-hour chart,  the pair is neutral, trapped between moving averages and Fibonacci levels, as technical indicators turn lower in positive ground.

Support levels: 107.00 106.60 106.25  

Resistance levels: 107.50 107.90 108.20

GBPUSD

The GBP/USD pair collapsed Friday, reaching a fresh June low of 1.2314, recovering some modest 20 pips ahead of the close. The decline was the result of the resurgent dollar’s demand on a risk-averse environment, with Wall Street edging firmly lower on the back of soaring coronavirus cases in the US, triggering concerns about a possible economic recovery. The UK didn’t publish relevant data at the end of the week, but over the weekend, news indicated that PM Boris Johnson will announce the creation of a task force designed to fast track and accelerate infrastructure spending and fuel the kingdom’s economic recovery.

In the Brexit front, German Chancellor Angela Merkel warned that the UK must “live with the consequences” of leaving the EU, and PM Johnson threatened to walk away from talks afterwards. Britain is prepared to leave on “Australia terms,” according to Downing Street if they can reach an agreement with the Union. Australia does not have a trade deal, but a series of mini-deals, which for the UK will result pretty much the same as leaving the EU without a deal. This Monday, the UK will publish money data from May. Representatives from both economies will resume talks this Monday.

The daily chart for the GBP/USD pair indicates that there is still room for further declines, as the pair has remained below all of its moving averages throughout the week, while technical indicators head firmly lower within negative levels. In the 4-hour chart, the bearish case is also strong, as the pair has accelerated its slump once breaking below the 200 SMA, now below all of its moving averages, while technical indicators maintain their bearish slopes near oversold levels.

Support levels: 1.2315 1.2270 1.2220

Resistance levels: 1.2365 1.2410 1.2460

AUDUSD

The AUD/USD pair was unable to attract speculative interest by the end of the week, ending it in the 0.6880 price zone. The dismal ruling mood had a limited impact on the Australian currency, which has been quite resilient to the negative sentiment throughout the week. The absence of Australian data has exacerbated range trading around AUD/USD, a situation that will be reverted these upcoming days, with busy calendars in Australia and China. Meanwhile, gold prices have soared on the back of risk-aversion, providing support to the Aussie, as spot gold finished the week around $ 1,770.00 a troy ounce. The macroeconomic calendar has little to offer at the beginning of the week during Asian trading hours.

The AUD/USD pair has been ranging for two weeks in-a-row, losing bullish potential according to the daily chart, as it settled just below a bullish 20 DMA. The Momentum indicator in the mentioned time frame heads firmly lower within negative levels, while the RSI indicator has also turned lower but around 55. Technical readings in the 4-hour chart indicate that the risk is skewed to the downside, as it is trading below its 20 and 100 SMA, while technical indicators remain flat within negative levels. The pair could extend its decline, but will only enter bearish territory on a break below 0.6770.

Support levels: 0.6850 0.6810 0.6770

Resistance levels: 0.6925 0.6970 0.7010

GOLD

Gold had a positive day on Friday as the risk aversion started to emerge in the markets. Heightened concerns over a second economic lockdown in the US amid the surging number of confirmed coronavirus cases caused risk-off flows to continue to dominate the financial markets. Florida reported nearly 9,000 new COVID-19 cases on Friday while Texas decided to close bars and limit restaurants' capacity to 50% to limit the spread of the virus. As markets are fearful of the second wave of the pandemic, the US has worsening conditions even in the first wave. While Wall Street had a sharp decline, the USD index DXY managed to advance through 97.50. As the panic emerged, Gold hit multi-years high before the weekend holiday. On Monday, Consumer Confidence and Economic Sentiment data will be featured in the European economic docket. Moreover, the EU and the UK will kick off the next round of Brexit negotiations. On Tuesday, first-quarter GDP figures from the UK will be watched closely by the market participants. In the second half of the day, FOMC Chairman Jerome Powell is scheduled to deliver a speech. The Conference Board's Consumer Confidence data from the US will be looked upon for fresh catalysts as well. On Wednesday, the ADP's Employment Change and the ISM's Manufacturing PMI will be featured in the US economic docket. At 18:00 GMT, the FOMC will release the minutes of its June meeting. Finally, on Thursday, the US Bureau of Labor Statistics will publish the jobs report, which will include Nonfarm Payrolls and Unemployment rate figures. 

In terms of technical levels, 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

Silver had an indecisive trading day on Friday outperformed by Gold trade. Gold to Silver ratio spiked over 101 level again. On the other hand, Silver managed to stay over 17.60$ critical level amid the incline on the USD index DXY. While the central banks around the world engaging in such quantitative easing will continue to be bullish for this market. That does not look like it is going to change anytime soon. Therefore, before the demand increases as the economies return to normal, Silver still gives investors an opportunity to buy.

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 retraced back on Friday giving back almost all its gains made in the previous day. The black gold lost its ground despite the upbeat data in the US signalling a faster recovery. On the other hand, the number of cases in the US is far from a decline forcing officials to take countermeasures again by restricting economic activity which limits the demand for energy. Also, escalating tensions in Hong Kong amid the coronavirus pandemic could worsen the growth outlook and further widen the geopolitical rift between China and the US over the autonomous region. As the IMF wrote: “Geopolitical tensions or broadening social unrest in response to rising global inequality could lead to a reversal in investor sentiment” which will hurt the sentiment for oil for sure.

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 sank %2.84 on a daily basis last Friday amid fears of coronavirus pandemic. Texas and Florida are forced to scale back plans to reopen parts of the economy as the number of cases continues to rise. The US sent out US Economic Advisor Kudlow to try and ease some of the panics and he stated every number is showing a "v shape" recovery for the US. Interestingly, this week the Fed managed to shrink its balance sheet for the second week in a row which we have not been able to say that in a while. The US could have a solution to this as Larry Kudlow the Director of the United States National Economic Council stated the US will go back to congress to look for more tools. On the data front, Powell and Mnuchin will testify on Tuesday and on Wednesday, ISM Manufacturing PMI(Jun), ADP Employment Change(Jun) and FOMC minutes will be followed by the investors. On Thursday, the labour data set including NFP will be released instead of Friday.      

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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