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Daily Market Report
28 Jul 2020

EURUSD

The EUR/USD pair surged to 1.1781, its highest since September 2018 when the pair reached 1.1814. Investors continued to sell the greenback on the back of tensions between the US and China and the coronavirus situation in the world's largest economy, pretty much ignoring macroeconomic releases. In the meantime, Republicans and Democrats in the US Senate are working on a new aid-package and may report on progress after Wall Street’s close. Equities traded in the red throughout Asia and Europe, but US indexes managed to advance, with the Nasdaq leading the way higher.

In the data front, Germany published the July IFO Business Climate which improved to 90.5 from 89.3, with Expectations jumping to 97 but the Current Assessment down to 84.5. The US published June Durable Goods Orders, which expanded by 7.3% slightly better than anticipated. Excluding transportation, new orders rose 3.3%, missing expectations, while ex-defense orders were up 9.2% against the 18.6% expected. This Tuesday, there is little in the docket, with the US publishing The Richmond Fed Manufacturing PMI and Consumer Confidence.

The EUR/USD pair trades in the 1.1750 price zone, retaining its bullish stance despite being overbought in the short-term. The 4-hour chart shows that technical indicators have partially lost their upward strength but continue to advance within extreme overbought readings. Moving averages in the mentioned time-frame keep heading north well below the current level. The pair has now posted gains for seven consecutive days, which increases the risk of a bearish correction, although it won’t be enough to confirm an interim top.

Support levels: 1.1750 1.1710 1.1670

Resistance levels: 1.1780 1.1815 1.1850

USDJPY

The USD/JPY pair traded as low as 105.11, a level that was last seen in March this year, to later stabilize around the 105.40 price zone. The pair held near its daily low despite the positive tone of US equities and government bond yields posting a modest intraday bounce, as speculative interest kept pricing-in a steeper US economic downturn.

Data coming from Japan at the beginning of the day was mostly discouraging, as the May All Industry Activity Index, which resulted in -3.5% from -7.6% in the previous month. The Leading Economic Index for the same month was downwardly revised to 78.4 while the Coincident Index came in at 73.4, below the previous estimate of 80.1. The country will publish early Tuesday the Corporate Service Price Index, foreseen in June at 0.5% YoY from 0.8% in the previous month.

 The USD/JPY pair retains its bearish stance heading into the Asian opening, as technical indicators continue to head lower within extreme oversold levels, just partially losing their directional strength. The 20 SMA heads lower almost vertically, well above the current level and above the larger ones. The pair has room to extend its decline towards the 104.40 price zone on a break below the mentioned daily low.

Support levels: 105.10 104.80 104.45

Resistance levels: 105.50 105.80 106.10

GBPUSD

The GBP/USD pair reached a four-month high of 1.2902, retreating just modestly ahead of the close to settle in the 1.2870 price zone. As it has been happening these last few days, the rally can be attributed to the dollar’s sell-off, as investors continue to price in a steeper economic downturn in the country. Later this week, the US will publish the preliminary estimate of Q2 Gross Domestic Product, with the economy seen contracting a whopping 34% in the three months to June, as a result of the coronavirus pandemic.

The UK, in the meantime, has nothing to celebrate as talks with the EU over their future trade relations are in a stalemate. Once the focus is out of the US situation, the Pound could suffer from a reality check. This Tuesday, the country will publish the CBI  from -37% in the previous month.

The GBP/USD pair is extremely overbought according to intraday charts, but there are no signs that it could change course anytime soon. The 4-hour chart shows that the price has moved further above a still bullish 20 SMA, which continues to advance beyond the larger ones. Technical indicators post uneven strength but hold within overbought readings. A break above the mentioned monthly high could see the pair reaching the 1.3000 threshold before speculative interest decides to take some profits out of the table.

Support levels: 1.2780 1.2735 1.2690

Resistance levels: 1.2815 1.2850 1.2895

AUDUSD

The AUD/USD pair has recovered some ground this Monday, ending the day not far below a daily high of 0.7149. The pair was under mild-selling pressure throughout the first part of the day, as despite the greenback’s weak tone, the poor tone of equities maintained the upside limited for the Aussie. It recovered during US trading hours, as Wall Street managed to post some gains. RBA Assistant Governor Chris Kent hit the wires, saying that the central bank is ready to buy bonds if needed to achieve its target for the 3-year yield of around 25bps. The country won’t release macroeconomic data this Tuesday.

The AUD/USD pair is neutral-to-bullish in the short-term. The 4-hour chart shows that it continues to develop above, but near a directionless 20 SMA, while the larger ones maintain their bullish slopes well below the shorter one. The Momentum indicator advances within positive levels, although the RSI consolidates around 60. As long as it holds above 0.7100, the pair has room to extend its gains towards 0.7200 and beyond during the upcoming sessions, particularly if equities performance continues to improve.

Support levels: 0.7100 0.7065 0.7030  

Resistance levels: 0.7160 0.7200 0.7240

GOLD

Gold finally printed a new all-time high as the USD index DXY sank sub-94.00 level on Monday. Gold hit 1.945$ as its new all-time high before finding balance around 1.930$. Apart from the usual risk events like the direction of the pandemic and the tensions between the US and China, the decline in the USD which is triggered by the extreme liquidity conditions and low to negative interest rates around the globe is creating a perfect environment for Gold to attract investors. As an indicator of this, according to Bloomberg, total Gold holdings in ETFs climbed to a record last week and posted an 18th consecutive week of inflows. On the CFTC-Commodity Futures Trading Commission side, the non-commercial futures contracts of Gold futures, traded by large speculators and hedge funds, totalled a net position of 266,436 contracts in the data reported through Tuesday, July 21st. This was a weekly gain of 4,008 net contracts from the previous week which had a total of 262,428 net contracts.       

As Gold broke a new record, now all the focus is on a test of 2.000$ level. Over the 1.920$ level (previous all-time high), resistances can be followed at 1.945$ (all-time high), 2.000$ and 2.040$. Below the 1.920$ (previous all-time high), the supports can be followed at 1.900$ and 1.825$ (2011 August close) levels.

Support Levels: 1.920$ 1.900$ 1.825$

Resistance Levels: 1.945$ 2.000$ 2.040$


gold

SILVER

Silver also followed the same fashion with Gold refreshing its highest level since August 2013. The decline seen in the USD index DXY continues through sub-94.00 levels lifting the precious metals alongside the current monetary policy conditions. Since the dip seen in March, Silver gained %75 compared to Gold’s print at %24. Also, after hitting to 127.00 level, Gold to Silver ratio retraced back to 85.00 levels as Silver outperformed Gold. The normalisation seen in industrial activity is the biggest supporter of Silver after the decline in the USD. As the global industrial production increases, the demand for Silver inclines. 

Over the 24.00$ level, Silver can target 25.11$ (August 2013 high), 26.23$ (2011-2012 multi-year support) and 28.00$ levels. 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: 25.11$ 26.23$ 28.00$ 


silver

CRUDE WTI

WTI did not react to the decline in the USD and kept its low profile move over the 41.00$ level. The tensions between the US and China is pressuring the WTI as a risk event while re-impose of the lockdown measures in the US and Europe creating fears of a decline in demand. The OPEC+ group will start to taper their output cuts and over the next two months with 2 million barrels per day. 

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

Dow Jones had a weak attempt to recover after two consecutive days of decline. The limited positive mood came in line with an expectation of at least $1 trillion second fiscal stimulus deal to be announced this week. On the other hand, this week, earnings reports from Amazon, alphabet and Apple will be followed by the traders. The USD kept its decline hitting its lowest level in two years to sub-94.00. On Monday, Durable Goods Orders in the United States expanded by 7.3% on a monthly basis to $206.9 billion in June following May's 15.1% increase, the US Census Bureau reported on Monday. This reading came in slightly better than the market expectation for an increase of 7.2% which also helped the positive risk sentiment.   

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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