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Daily Market Report
01 Jul 2020

EURUSD

The American dollar strengthened throughout the first half of the day, but turned south in the American session, with investors selling the greenback as the quarter comes to an end. The EUR/USD pair bottomed at 1.1190 and hit a daily high of 1.1260, within familiar levels for a third consecutive week. The dollar surged amid comments from US Federal Reserve Chief Powell, who said that, despite the “extraordinary uncertain” economic outlook, the economy entered a new phase sooner than expected, adding that macroeconomic data is providing positive signs.

In the data front, the EU published the preliminary estimate of June CPI, which rose by 0.3% when compared to a year earlier, better than anticipated. The core reading, however, retreated to 0.8% as expected. The US released the Chicago PMI for June, which improved to 36.6 from 32.3, missing the market’s expectations, and the CB Consumer Confidence Index, which surged to 98.1, better than the 91.6 expected.

This Wednesday, Germany will unveil May Retail Sales and the June unemployment rate. Markit will publish the final readings of the June Manufacturing PMI for the EU and the US. Also, the US will publish the official ISM Manufacturing PMI, foreseen steady at 49.6, and the ADP survey on private jobs creation, foreseen up by 3 million.

The EUR/USD pair is trading marginally higher daily basis, around the 1.1230 level by the end of the US session. The short-term picture is neutral, as the pair remains trapped between Fibonacci levels. In the 4-hour chart, technical indicators hover around their midlines without directional strength, confirming the absence of clear interest, while moving averages are flat, the 20 SMA a few pips below the current level, and the 100 SMA converging with the immediate Fibonacci resistance at 1.1270.

Support levels: 1.1210 1.1170 1.1125  

Resistance levels: 1.1270 1.1310 1.1350  

USDJPY

The USD/JPY pair reached a fresh 3-week high of 107.97, ending the day not far below the level. A better market mood after cautiously optimistic comments from US Fed’s Powell and the positive tone of equities underpinned the pair, although gains were limited by absent dollar’s demand. US Treasury yields, in the meantime, posted modest intraday advances, with the yield of the 10-year note up to 0.66%.

Japan published the May Unemployment Rate, which surged to 2.9%, while Industrial Production in the same month plunged 8.4% MoM and fell 25.9% when compared to a year earlier. Housing Starts, however, were down 12.3% vs. -15.9% expected. The country will publish the June Consumer Confidence Index this Wednesday, foreseen at 20.9 from 24 in the previous month. It will also publish the Tankan Large Manufacturing Index, seen in Q2 at -31 from -8 in the previous quarter.

The USD/JPY pair has reached the 50% retracement of its June decline, pressuring the level ahead of the Asian opening. In the short-term, the risk is skewed to the upside, although the momentum is still limited. In the 4-hour chart, the pair has spent the day above all of its moving averages, with the 20 SMA advancing above the 100 SMA. Technical indicators, in the meantime, remain near their daily highs, although without directional strength.

Support levels: 107.50 107.10 106.70

Resistance levels: 107.95 108.30 108.65

GBPUSD

The GBP/USD pair recovered some ground after reaching a monthly low on Monday, ending the day around the 1.2380 level. The advance was pure dollar’s weakness, as UK data was worse than expected while Brexit talks were tense. The UK Q1 GDP was revised to -2.2% from 2.0%, while Business Investment in the same quarter was down by 0.3%. The Current Account in the three months to March posted a deficit of £-21.1 B much worse than the expected £-15.

Also, EU’s chief negotiator Michel Barnier accused the UK of making unacceptable demands on financial services, saying that the kingdom is trying to secure “easy” access to the bloc’s single market. His comments indicate that no progress has been made in Brexit talks. Meanwhile, UK PM Johnson announced plans to revive the UK’s economy, pledging to solve social care issues and educational inequality, while supporting local companies.  The UK macroeconomic calendar will have little to offer this Wednesday.

The GBP/USD pair is trading just above a still bearish 20 SMA, although below the larger ones, in its 4-hour chart. Technical indicators have recovered from oversold readings but lost bullish strength after reaching their midlines, somehow suggesting a limited buying interest. The pair has struggled around the 200 SMA before falling, which currently stands at 1.2425. The level is the immediate resistance, and bulls could feel a bit more confident once beyond it.

Support levels: 1.2330 1.2290 1.2250

Resistance levels: 1.2425 1.2460 1.2505

AUDUSD

The AUD/USD pair neared the 0.6900 figure this Tuesday, advancing within range. Australia published May Private Sector Credit figures at the beginning of the day, which was down by 0.1% in the month and up by 3.2% in the year. More relevant, China published the NBS Manufacturing PMI, which was up to 50.9 in June, better than the previous 50.6. The Non-Manufacturing PMI recovered from 53.6 to 54.4. Gold prices provided further support to the Aussie, as the bright metal reached a fresh multi-year high of 1,785.96.

This Wednesday, Australia will publish May Building Permits, seen falling by 10% in the month, and the AIG Performance of Manufacturing Index for June, previously at 41.6. China, on the other hand, will publish the Caixin Manufacturing PMI for June, foreseen at 50.5 from 50.7 in May.

The AUD/USD pair is holding on to its neutral stance in the short-term. The 4-hour chart shows that the pair is trading around flat 20 and 100 SMA, while technical indicators stand within neutral levels. Nevertheless, the bearish potential continues to be limited, with intraday dips attracting buyers. The pair needs to advance beyond 0.6925 to gain some bullish potential and approach to 0.7000 threshold.

Support levels: 0.6850 0.6810 0.6770

Resistance levels: 0.6925 0.6970 0.7010

GOLD

Gold kept its advance on Tuesday hitting its highest level since 2012 over 1.780$. Central banks injected massive amounts of liquidity to markets, purchased bonds and lowered the interest rates to historic low rates to fight with the coronavirus pandemic. All those actions are Gold bullish and also the fear of a second wave in the pandemic is also increasing the demand as a safe-haven asset. On the other hand, quarter-end trading left the equity markets directionless with the USD index DXY barely changed its stance. On the contrary side, US Treasury Secretary Mnuchin noted on Tuesday that the Trump administration is looking to pass an additional coronavirus relief bill by the end of July which supported the risk appetite.

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 followed the upbeat mood seen on Gold while the yellow metal tested new highs in the last twelve years. The white metal managed to lift itself over 18.00$, the only roadblock in front of Silver is its industrial metal label since the start of the coronavirus pandemic. The physical demand for Silver decreased extremely as the global economies shut down. Therefore, Silver failed to benefit Gold’s precious metal bull run.  

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 once again failed to break 40.00$ barrier on Tuesday as this level was tested numerous times in June. Early in the day, China’s upbeat official PMIs during the early Asian session supported the black gold with the reports from Reuters stating that OPEC oil supply fell by 1.25 million barrels per day (BPD) in June from May's level. On the other hand, China’s passage of the Hong Kong security law renewed fears of the Sino-American tussle and weighed on the oil prices. Also on the negative side are worrisome virus figures from China, the US and Australia that suggest the brewing of wave 2.0.

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 rebound on Tuesday testing levels a tick below 26.000 level. After the sell-off seen on last Friday, Dow Jones started the week with an upbeat mood supported by A better-than-expected US pending home sales data. On the other hand, after the Federal Aviation Administration allowed test flights for the 737 Max – the company’s flagship product that has been grounded for more than a year. Boeing contributed to 192 points or 33% of the index’ overnight gain on Tuesday. However, right before the NYSE closing bell, Reuters reported that Norwegian Air had cancelled 97 orders that included 92 737-MAX jetliners. It also filed legal action against the company, seeking to recover pre-delivery payments due to their negligence in crashing two planes. Also, as the number of cases in the US continues to surge along with the reopening of the economies, the advance seen in Wall Street remained limited. Today all the focus will be on ISM Manufacturing PMI(Jun) data set in the US.

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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