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Daily Market Report
03 Aug 2020

EURUSD

The EUR/USD pair closed the week with gains, but of a multi-month high of 1.1908, as profit-taking and extreme oversold conditions helped the dollar to recover some ground. Nevertheless, the greenback was once again the biggest loser, hit by an extremely concerned US Federal Reserve and a record slump in GDP, down by 32.9% in the second quarter of the year according to preliminary estimates. Even further, the pandemic situation remains harsh. The number of new daily deaths is on the rise, while daily contagions have stabilized in the US above 60,000 a day.  

Data released on Friday helped the greenback, as Germany reported June Retail Sales, which came in better-than-anticipated, declining in the month by 1.6%, but the EU preliminary estimate of Q2 GDP collapsed by 12.1%, worse than anticipated. As for the US, the country reported the final version of the Michigan Consumer Sentiment Index, which was downwardly revised to 72.5 in July.

A busy week will start with the release of the final versions of July Markit Manufacturing PMIs for all major economies, generally expected to suffer upward revisions. The US will also publish the official ISM Manufacturing PMI for the same month, foreseen at 54 from 52.6.

The EUR/USD pair has finished the week in the 1.1770 price zone, retaining its long-term bullish stance. The pair is trading above the 23.6% retracement of its July’s advance, an immediate support level at 1.1737. The daily chart shows that technical indicators are retreating from extreme levels but still in overbought territory, as the 20 DMA maintains its bullish slope far below the current level. In the shorter-term, and according to the 4-hour chart, the bearish potential seems limited, as the pair is struggling with a bullish 20 SMA, while technical indicators are losing their bearish strength just above their midlines. The corrective decline could continue on a break below the mentioned Fibonacci support level, while bulls will retake control on an advance beyond 1.1815.

Support levels: 1.1735 1.1690 1.1650

Resistance levels: 1.1815 1.1860 1.1905

USDJPY

The USD/JPY pair bottomed at 104.18 on Friday, a level that was last seen early March, later recovering to settle at 105.87, having trimmed most of its weekly losses. Mixed US data helped the greenback, as Personal Spending in the country increased by 5.6% in June, while Personal Income in the same month declined by 1.1%, this last missing the market’s expectation. Core PCE inflation, in the meantime, contracted to 0.9% from 1.0% in the previous month. Nevertheless, it was good enough to help Wall Street recover the ground shed in the previous sessions. Treasury yields, however, remained depressed and near record lows. Yields for the 3-year note and the 5-year note hit all-time lows, while that on the 10-year note plunged to 0.52%, a four-month low.

Japanese data released on Friday were generally upbeat, as the unemployment rate of the country improved to 2.8% in June, while Industrial Production in the same month rose 2.7% MoM. July Consumer Confidence improved from 28.4 to 29.5 but missed expectations of 32.7. At the beginning of the new week, the country will publish the final version of the July Jibun Bank Manufacturing PMI, foreseen unchanged at 42.6.

The USD/JPY pair still has limited bullish potential in its daily chart, as the over 150 pips’ advance was barely enough for technical indicators to correct extreme oversold readings. In the mentioned time-frame, the pair continues to develop below all of its moving averages, with the 20 DMA heading firmly lower below the larger ones at around 106.60. In the shorter-term, and according to the 4-hour chart the pair could extend its advance, as it recovered above its 20 SMA, which is now gaining bullish traction, as technical indicators hold near their recent highs well into positive ground. A bearish 100 SMA provides critical resistance at 106.45.

Support levels: 105.60 105.20 104.70

Resistance levels: 106.05 106.45 106.90

GBPUSD

The GBP/USD pair reached 1.3169 on Friday, its highest since last March, to close the day unchanged, but the week with solid gains at 1.3085. The pair was driven mostly by the greenback, which remained weak after the events that took place in the US on Thursday, with a dovish Federal Reserve and Q2 GDP contracting a record 32.9% in the three months to June.

The UK didn’t publish relevant data by the end of the week, with the focus there on coronavirus developments. The UK government imposed new restrictions on 4.3 million people in northern England after a recent rise in cases. Also, PM Johnson announced a delay to the further easing of coronavirus restrictions in England for at least two weeks, initially scheduled to take place at the beginning of August. Markit will publish the final version of the UK July Manufacturing PMI, foreseen unchanged at 53.6.

The daily chart for the GBP/USD pair shows that the bullish bias persists. The Momentum indicator keeps heading north while the RSI is stable, both in extreme overbought territory. The 20 DMA, in the meantime, crosses above the 200 DMA well below the current level. The 4-hour chart shows that technical indicators eased from extreme levels, heading lower but well into positive ground, as the pair develops above a bullish 20 SMA, this last at around 1.3030. A bearish extension should be understood as corrective, although selling could intensify on a break below 1.2990.

Support levels: 1.3030 1.2990 1.2950

Resistance levels: 1.3120 1.3170 1.3225

AUDUSD

The AUD/USD pair pulled back from 0.7226, its highest in over a year, to finish Friday in the red, but the week in the green at 0.7142. The Aussie found support on upbeat Chinese data, as the July NBS Manufacturing PMI printed 51.1 against 50.7 expected, while the Non-Manufacturing PMI for the same month, printed at 54.2 vs. 51.2 expected. Australian data, however, missed expectations, with Producer Prices down 1.2% in the second quarter of the year.

Weekend news were worrisome as Victoria’ officials toughen its social distancing measures after announcing a state of disaster. The measures come after the Melbourne area reporter over 670 new coronavirus cases on Sunday and will extend the current lockdown for another six weeks. The country will start the week reporting the July AIG Performance of Manufacturing Index, previously at 51.5, and TD Securities Inflation for the same month. The pandemic developments, however, could take their toll on the Aussie and overshadow macroeconomic figures.

According to the daily chart, the AUD/USD pair retains its bullish stance, as the pair continues to develop above a firmly bullish 20 DMA, which advances above the larger ones. Technical indicators have lost their bullish strength, but remain well above their midlines. In the 4-hour chart, however, the risk is skewed to the downside, as the pair broke below its 20 SMA, while technical indicators stabilized within negative levels.  Further declines are to be expected on a break below 0.7120, Thursday low and the immediate support level.

Support levels: 0.7120 0.7070 0.7030

Resistance levels: 0.7180 0.7225 0.7260 

GOLD

After the impressive rally that lifted Gold to its new all-time high zone, the yellow metal started to show tiredness close to 1.980$ zone. While Gold re-gained its lost ground made on Thursday and inched its all-time high, in the short term there is a strong possibility that the yellow metal will have technical corrections before heading up further north. The Fed said it would extend USD liquidity swap lines for nine central banks through 31 March 2021 to serve as a saviour for the markets. Therefore, USD will face more downside stress and Gold will benefit the decline in the USD and also zero to negative interest rates around the globe. At this point, the disagreement between the Republicans and the Democrats over the second stimulus package is also supporting Gold. Therefore, any kind of deal must be watched by the Gold traders since the outcome might put the yellow metal under pressure at least for a short term.

The week will start with Caixin Manufacturing PMI(Jul) from China and ISM Manufacturing PMI(Jul) from the US on Monday. Also on Wednesday, ISM Non-Manufacturing PMI(Jul) data set from the US will be followed. Following the initial jobless claims data on Thursday, the NFP data set will be followed by all the traders since the rising number of new cases in the US forced some states to re-impose some of the countermeasures against the coronavirus pandemic hurting the economic activity again.    

After the impressive rally seen in Gold, the yellow metal had a technical correction. 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

Silver also regained its lost ground made on Thursday and lifted itself over 24.00$ level. While the industrial production is slowly getting a grip globally, supply disruptions have also helped fuel the rally in Silver markets. Mines in Peru and Mexico, which make up almost 40% of world supply, have shut down in mass-scale earlier this year as a result of the Covid-19 pandemic. Gold to Silver ratio normalised to 80.00 after hitting 126.00 levels in March. The normalisation in the ratio should be around 70.00, therefore, Silver has still room for improvement in the coming terms. On the other hand, stimulus programs are bullish for Silver with hopes of supporting the industrial activity which will increase the demand for the white metal.

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 kept its narrow consolidation zone between 40.00$ and 41.00$ as the Baker Hughes rig count data change stabilised at 251 the first time since February 2020. While the upbeat Chinese Manufacturing PMI data supported the risk appetite, the correction up seen in the USD limited the gains for WTI. While the economic activity rises in China, the upsurge in the number of new cases in the US is putting fears to markets as new countermeasures will slow the activity and limit the demand for energy. According to the Energy Information Administration (EIA), the two nations combined accounted for about 34 per cent of global oil consumption in 2017 while 20% comes from the US.

WTI found a balance between 40.00$ and 41.00$ almost in the whole of July. However, as the black gold failed to extend its incline, the prices retraced with a lack of an extra catalyst. 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

While having a negative day on Friday, Dow Jones was saved in last minute as the mega-tech, consumer services and telecom earnings lifted other indexes in Wall Street. On the other hand, construction heavy machinery manufacturer Caterpillar beat estimates with its earnings but as the revenue and profit declined its stock dived down limiting the gains in Dow Jones. Besides the strong earnings from especially tech giants, the indexes are having hard time to keep their rally as the previous one is mostly supported by the excess amount of cash looking for a direction in the markets.   

Main data sets measuring the economic activity in the US will be followed this week starting from ISM Manufacturing PMI(Jul) from the US on Monday and ISM Non-Manufacturing PMI(Jul) on Wednesday. After the initial jobless numbers on Thursday, all eyes will be on the NFP and other labour data set as previous initial jobless claims data showed an incline due to re-impose of countermeasures against the coronavirus pandemic.

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


Dow Jones

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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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