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Daily Market Report
24 Jul 2020

EURUSD

The EUR/USD pair trades at fresh multi-year highs above 1.1600 as speculative interest engaged in another round of dollar selling.  Major pairs have spent most of this Thursday consolidating, with EUR/USD confined to a 40 pips’ range throughout the first half of the day, ignoring macroeconomic releases. Germany published the  GFK Consumer Confidence Survey, which came in at -0.3 for August, from -9.4 in the previous month. As for the US, the country published Initial Jobless Claims for the week ended July 17, which resulted at 1.41 million, worse than the 1.3M expected. Continuing Jobless Claims for the week ended July 10, improved to 16.197M.  

Trouble for the greenback came from two fronts, mounting tensions between the US and China, which put at risk the trade deal between the two economies, and the coronavirus pandemic, which offers no respite. The health system in Southern states is about to collapse, while the number of new contagions increased in the last 24 hours by over 71,000.

The week will end on a high note, as Markit will publish the preliminary estimates of July PMIs for the EU and the US. Most indexes are expected to have recovered further after collapsing to record lows amid the pandemic-related lockdowns. The US will also publish June New Home Sales seen up in the month by 4.0% after adding 16.6% in the previous month.

The EUR/USD pair is trading near its daily highs in the 1.1620 region, overbought but still bullish in the short-term. The 4-hour chart shows that an intraday slide fell short of testing a firmly bullish 20 SMA, which continues to advance above the larger ones. Technical indicators, in the meantime, have partially lost their positive momentum but remain near their daily highs, indicating that buyers remain in control of the pair.

Support levels: 1.1590 1.1545 1.1500  

Resistance levels: 1.1660 1.1695 1.1730

 

USDJPY

The USD/JPY changed course after failing to extend gains above the 107.00 level, down on the day amid the broad dollar’s weakness coupled with the poor performance of Wall Street. Adding to the negative momentum of the pair, US Treasury yields edged lower on the back of dismal US employment-related data. The yield on the benchmark 10-year US Treasury note traded as low as  0.581%, while the yield on the 10-year US Treasury-Inflation Protected Securities fell to a record low of -0.907%. Japanese markets will be closed for a second consecutive day, which means there won’t be macroeconomic data coming from the country.

Despite still trading within its usual monthly range, the USD/JPY pair is bearish. The 106.60 support level stands in the way for a steeper decline. In the 4-hour chart, the pair has met sellers around bearish converging 100 and 200 SMA, also below the 20 SMA. Technical indicators, in the meantime, remain within negative levels, although having lost their bearish strength. Nevertheless, and while the price keeps pressuring lows despite lower volumes at the end of the day, the risk is skewed to the downside, to be confirmed on a break below 106.60.

 Support levels: 106.60 106.20 105.90

Resistance levels: 106.95 107.45 107.80 

GBPUSD

The GBP/USD pair is once again ending the day with modest gains in the 1.2740 unable to take advantage of the broad dollar’s weakness, which just helped the pair to remain afloat. The Pound suffered from Brexit-related headlines, as EU’s Chief negotiator Barnier said that they are still far away in negotiations with the UK after the fifth round of talks. He added that there had been no progress on the level playing field, neither on fisheries, two key issues. Also, the UK published the CBI Industrial Trends Survey on Orders, which came in worse than expected, at -46% from -58% previously.

 This Friday, the UK will publish the GFK Consumer Confidence Index, foreseen at -26 from -27 in the previous month. Also, the kingdom will publish June Retail Sales, seen up monthly basis by 8.%.  Markit will unveil its preliminary estimates of its July PMIs, with services output foreseen improving to 51.5 and manufacturing activity expanding to 52.

The GBP/USD pair is trading at the upper end of its weekly range, with the bullish potential easing but far from bearish according to intraday technical readings. The 4-hour chart shows that the 20 SMA maintains its bullish slope below the current level, while technical indicators have continued to ease, now nearing their midlines. Somehow, buyers have turned more cautious, but the bearish potential remains limited by the dollar’s self-weakness.

Support levels: 1.2705 1.2660 1.2615

Resistance levels: 1.2770 1.2815 1.2850

AUDUSD

The AUD/USD pair is battling to retain the 0.7000 level ahead of the Asian opening, dragged lower on Thursday by the negative tone of Wall Street. The Aussie took a hit at the beginning of the day from local data, as the quarterly NAB’s Business Confidence Index came in at -15, much worse than the -8 expected. The intraday decline, however, was limited by the absence of dollar’s demand.

This Friday, Australia will publish the preliminary estimate of the July Commonwealth Bank Manufacturing PMI foreseen improving to 53.6. The Services PMI for the same period is expected to print 53.2, slightly better than the previous 53.1.

The AUD/USD pair is at risk of extending its decline on Friday, although the slide seems corrective. In the 4-hour chart, the pair is struggling around a still bullish 20 SMA, but technical indicators head sharply lower, barely holding above their mid-lines. The pair bottomed for the day at 0.7090, the immediate support, and the level to break for bears to insist.

Support levels: 0.7090 0.7050 0.7010

Resistance levels: 0.7160 0.7200 0.7245 

GOLD

Gold came close to 1.900$ level on Thursday as the impressive rally continues. On the other hand, the USD index DXY is keeping its decline sliding below 95.00 level. Also, the yields continue to decline reflecting the extreme liquidity in the markets. The bullish move carried Gold to its highest level since August 2011 as the yellow metal printed its all-time high at 1.920$. As a result of this extreme liquidity, the money is flowing into Wall Street at the moment especially to Nasdaq index creating a bubble ignoring the aftermath of FED’s current policy, uncertainty surrounding the elections in the US and the escalating tensions between the US and China.  

Gold is at its highest level since September 2011 as 1.920$ was tested as all-time high back then. Above 1.850$ level, Gold will most likely to test 1.900$, 1.920$ (all-time high) and 1.950$. On the downside, below the 1.825$ (2011 August close), 1.800$ and 1.750$ (December 2012 peak) levels can be targeted.  

Support Levels: 1.825$ 1.800$ 1.750$

Resistance Levels: 1.900$ 1.920$ 1.950$

Gold

 

SILVER

Silver tried to advance its bullish run on Thursday but failed to sustain over 23.00$ and retraced back with a technical move. Unlike Gold, Silver is a key component in electric vehicles and increased demand for renewable energy solutions is likely contributing to its price rise, too. Half of all demand for Silver comes from industrial buyers, therefore, the normalisation in industrial production will definitely push Silver prices to further highs.  

If Silver continues to stay over 22.19$ (2014 high) level, the resistances can be followed at 23.00$, 25.15$ (2013 August high) and 26.23$ (2011-2012 multi-year support). Below the 22.19$ (2014 high) level, the supports can be followed at 21.50$ and 21.00$ levels.

Support Levels: 22.19$ 21.50$ 21.00$

Resistance Levels: 23.00$ 25.15$ 26.23$

Silver

CRUDE WTI

The risk appetite shifted on Thursday pushing the equity markets lower with a technical correction with WTI. The black gold retraced back to 41.00$ level after testing 42.50$ intra-week. Risk events like the tension between the US and China and the incline in coronavirus cases are pressuring WTI despite the decline seen in the USD continues. On the other hand, WTI was saved by OPEC+ decision to cut production after the historic decline seen in March. As a part of the normalisation process as the economic activity is picking up the pace, it was recommended transitioning into the 2nd phase of the cut agreement which is set to ease output cuts by 2 million barrels per day starting from August.  

As long as WTI holds over 41.00$ level, the resistance levels can be followed at 42.00$, 46.57$ (March decline start) and 50.00$ levels. Below the 41.00$ level, the supports can be followed at 40.56$ (65.62$-0.00$ %61.80) and 39.00$ levels.

Support Levels: 41.00$ 40.56$ 39.00$

Resistance Levels: 42.00$ 46.57$ 50.00$


oil

DOW JONES

After three consecutive days with incline, Dow Jones almost gave away this week’s gains on Thursday as the risk sentiment shifted. On the other hand, Gold is keeping its decisive rally and on its way to test its all-time high at 1.920$. At this point, its a clear consensus that Wall Street is extremely overpriced supported by the extreme liquidity conditions created by FED to support the economy against coronavirus pandemic shocks. However, in case of a rise in inflation in the aftermath of the pandemic, FED will have a hard time to pull back the liquidity given to the market by raising interest rates. In that case, the extreme valuation in Wall Street may face a huge retreat causing the current bubble to burst. The risk events like the uncertainty caused by the elections in the US and rising tensions between the US and China is ignored at the moment. On the data front, the initial jobless claims data stalled on Thursday proving the effect of the incline seen in coronavirus cases. Initial jobless claims rose to 1.42M for the week ending July 18, from 1.31M the prior week.       

Technically speaking, over the 26.000 level, the resistance can be followed at 27.000, 27.583 (June 2020 high) and 28.000 levels. On the other hand, below the 26.000 level, targets downside can be followed at 25.210 (29.568-18.158 %61.80), 24.690 (2020 April-May resistance) and 23.863 (29.568-18.158 %50.00).

Support Levels: 26.000 25.210 24.690

Resistance Levels: 27.000 27.583 28.000 

DowJones

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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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