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Daily Market Report
29 Jul 2020

EURUSD

The American dollar recovered some ground this Tuesday, but its gains were modest rather a corrective recovery than a sudden appetite for the greenback. The EUR/USD pair fell to 1.1698, to later recover to the current 1.1730 price zone, around which it spent most of the US session. The macroeconomic calendar had little to offer, as the only relevant news was the US CB Consumer Confidence, which resulted in 92.6 in July, down from 98.3 and missing the market’s expectation of 94.0. Also, and without previous notice, the US Federal Reserve announced the extension of its emergency lending facilities through Dec 2020, extending it for three months.

 This Wednesday, the focus will be on the US Central Bank. The Fed is expected to maintain its current policy unchanged, adopting a wait-and-see stance after the massive stimulus announced these last few months. Nevertheless, and as coronavirus cases in the US continue to soar, uncertainty over the economic future could trigger a response from policymakers. As usual, chief Powell will offer a speech, from where investors will likely take the most clues.

The EUR/USD pair maintains its bullish stance despite the absence of momentum in the short-term. The 4-hour chart shows that the pair keeps developing above a firmly bullish 20 SMA, currently providing dynamic support around 1.1680. Technical indicators have retreated from extreme levels, with the RSI currently consolidating around 67 and the Momentum heading marginally lower well above its midline. The corrective decline could gather pace once below the mentioned 20 SMA, while bulls will give in another push once the pair surpasses the 1.1780 high.

Support levels: 1.1710 1.1670 1.1615

Resistance levels: 1.1780 1.1815 1.1850

USDJPY

The USD/JPY pair has extended its monthly decline to 104.95, trading a few pips above the 105.00 level ahead of the Asian session opening. The pair advanced at the beginning of Tuesday, reaching a daily high of 105.68 as the dollar found temporal support in news related to the new US coronavirus aid-package, which now needs to be approved by Congress. The dollar’s corrective advance, however, was short-lived, as speculative interest continued to sell the currency ahead of first-tier data, starting this Wednesday with the Federal Reserve decision.

Adding pressure on the pair, Japan’s data beat the market’s expectations, with the June Corporate Service Price Index, which improved to 0.8% YoY from 0.5% in the previous month. Also, US Treasury yields edged lower, while US indexes remained under pressure, unable to post intraday gains but little changed on a daily basis. During the upcoming Asian session, Japan won’t publish macroeconomic data, although BOJ’s Deputy Governor Masayoshi Amamiya is scheduled to speak.

The USD/JPY pair is trading around 105.10, and still at risk of falling. The 4-hour chart shows that technical indicators have bounced modestly from their daily lows but also that they remain well into negative territory. The 20 SMA, in the meantime, heads lower almost vertically above the current level, now around 105.80. As it was commented on previous updates, the pair has room to extend its decline towards the 104.40 price zone before a relevant bounce could take place.

Support levels: 104.80 104.45 104.00

Resistance levels: 105.50 105.80 106.10

GBPUSD

The Sterling continued to benefit from the broad dollar’s weakness, with GBP/USD reaching 1.2952, its highest in four months. The UK currency found additional support in the July CBI Distributive Trade Survey on realized sales unexpectedly jumped to 4% from -37% and largely surpassing the expected -25%. , CBI Chief Economist, Rain Newton-Smith, however, warned that “the re-opening of non-essential retail was a vital step towards recovery but isn’t a cure-all,” as he added that for some businesses, the picture “remains bleak.”

Meanwhile, UK PM Johnson warned of a second wave of coronavirus hitting Europe, adding that he won’t hesitate to take decisive action to prevent the UK from suffering from another outbreak. His comments came after the UK imposed a two-week quarantine to all those travellers arriving from Spain. This Wednesday, the UK will publish the BCR Shop Price Index for June, previously at -1.6%, and June money data.

The GBP/USD pair is trading a few pips below the mentioned high and could extend its gains during the upcoming sessions. The 4-hour chart shows that the pair is developing well above a bullish 20 SMA, which continues to advance above the larger ones. Technical indicators have lost their bullish strength but hold near their intraday highs in overbought territory, indicating the absence of selling interest.

Support levels: 1.2905 1.2860 1.2810

Resistance levels: 1.2960 1.3000 1.3050

AUDUSD

The AUD/USD pair is ending Tuesday with modest gains around 0.7160, having spent the day within familiar levels, although posting a higher high and a higher low daily basis. Once again, the lack of dollar’s demand kept the pair afloat, despite the poor performance of equities, which usually tend to drag the pair lower.

During the upcoming Asian session, Australia will publish Q2 inflation data, expected to have plunged to record levels, a result of the ongoing battle to control the coronavirus pandemic. According to preliminary estimates, Q2 CPI is seen at -2.0% from 0.3% in the previous quarter, and at -0.4% when compared to the second quarter of 2019 vs. the previous 2.2%. The Trimmed Mean CPI is expected at 0.1% QoQ and 1.4% YoY. Worse than expected figures could trigger a downward movement in the pair, but it seems unlikely it will trigger a substantial bearish movement.

The AUD/USD pair is trading not far from this year high at 0.7182, the immediate resistance level. The short-term picture favors a bullish extension, as AUD/USD continues to develop above a directionless 20 SMA in its 4-hour chart, while the larger ones continue to advance below it. Technical indicators lack directional momentum but hold well within positive levels.

Support levels: 0.7100 0.7065 0.7030  

Resistance levels: 0.7185 0.7220 0.7260

GOLD

The anxiety in the markets is escalating as Gold tested a new all-time high while Wall Street retraced back on Tuesday. The yellow metal extended its record to 1.981$ level before finding balance around 1.950$ level. Apart from the escalating tensions between the US and China with the direction of the coronavirus pandemic, Gold is highly supported by the massive retracement seen in the USD and also the decline in real rates. Despite the current extreme liquidity given by the world’s central banks, the second wave of a fiscal stimulus package is in discussions in the US. Therefore, the new package will increase the liquidity in the markets which will support Gold further.  

As the 2.000$ level is on sight now, as long as Gold stays over 1.950$, the targets upside can be followed at 1.980$ (new all-time high), 2.000$ and 2.040$ levels. Below the 1.950$ the supports can be followed at 1.920$, 1.900$ and 1.825$ (2011 August close) levels.

Support Levels: 1.920$ 1.900$ 1.825$

Resistance Levels: 1.980$ 2.000$ 2.040$


Gold

SILVER

After the impressive rally that carried Silver over 24.00$ level, the white metal failed to keep up with Gold on Tuesday. As Gold tested its new all-time high, silver ended the day in the negative territory after hitting its highest level since April 2013. The retracement is highly linked to the fears of the second wave in coronavirus pandemic which will likely to disrupt the industrial production and the demand for Silver.  

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

As the number of new cases in Europe and Asia continues to re-surge, oil prices are pressured with the fear of re-imposing lockdown measures which will limit the demand. On the other hand, USD rebounded from its two-year lows and added extra pressure on WTI. After the historic plunge seen in April, WTI managed to lift itself to 40.00$-41.00$ range and found balance looking for an extra catalyst to move up.      

If WTI manages to hold over 40.56$ (65.62$-0.00$ %61.80) level, the targets upside can be followed at 41.00$, 46.57$ (March decline start) and 50.00$ levels. Below the 40.00$, the supports can be followed at 39.00$ and 32.81$ (65.62$-0.00$ %50) levels.

Support Levels: 40.00$ 39.00$ 32.81$ 

Resistance Levels: 41.00$ 46.57$ 50.00$

Oil

 

DOW JONES

Dow Jones retraced back on Tuesday erasing Monday’s gains. The move is assisted bu the sharp decline seen in consumer confidence and rising number of new cases in the US. The US consumer confidence sank in July to a reading of 92.6 as coronavirus infections continue to spread in many parts of the country. Most of the big declines came in states that have had huge increases in the number of new COVID-19 cases. There was a large decline in the expectations index reflected big drops in sentiment in Michigan, Florida, Texas, and California, all states that have seen a resurgence in coronavirus cases. The reading is down from a reading of 98.3 in June. On the other hand, markets are cautious before the mega-tech companies earnings due on Thursday. Also, all eyes will be on FOMC tomorrow as FED already stated that they will keep the rates unchanged-almost zero for a longer period. The second stimulus package debate is getting closer to a dead-line as Republicans and Democrats are still sticking to their proposals.     

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

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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