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Daily Market Report
07 Aug 2020

EURUSD

The EUR/USD pair has surged to 1.1915 this Thursday, its highest in two years, amid persistent dollar’s weakness. The market’s mood turned sour throughout the first half of the day, giving the greenback a brief intraday respite. Nevertheless, the pair is ending a third consecutive day with gains a handful of pips below the 1.1900 mark. Concerns surrounding the US currency remain the same, with the focus on tensions with China, the upcoming coronavirus aid package and economic growth.

In the data front, Germany published June Factory Orders, which were much better than anticipated, surging in the month 27.9%. When compared to a year earlier, orders declined 11.3% against the -34% expected. The US published some employment-related figures, relevant ahead of the Nonfarm Payroll report. Initial Jobless Claims improved to 1.18M in the week ended July 31, although US employers announced  262,649 job cuts in the month, up 54% from June, according to the Challenger Job Cuts report.

As for the US NFP report, the market expects that the US has added 1.6 million jobs in July, after adding 4.8 million in the previous month. The unemployment rate is expected to have shrunk from 11.1% to 10.5%, although the participation rate is also seen down, from 61.5% to 61.1%.

The EUR/USD pair is overbought, but still heading north according to intraday readings. The 4-hour chart shows that a mildly bullish 20 SMA, attracted buyers, providing an immediate support level at around 1.1810 now. Technical indicators, in the meantime, remain within positive levels, the Momentum holding at highs and the RSI losing strength around 58. Overall, the risk remains skewed to the upside, with another attempt above 1.1910 probably anticipating higher highs ahead.

Support levels: 1.1835 1.1790 1.1740

Resistance levels:  1.1910 1.1950 1.1990

USDJPY

The USD/JPY pair is trading lower in range, heading into the Asian opening trading at around 105.45. The pair was weighed by the poor performance of equities during the first half of the day, and falling Treasury yields, which flirted with their recent lows amid uncertainty about the next US stimulus package. So far, Congress keeps discussing it, with US Republican Senator Shelby saying that the two parties are still far apart on a deal. US President Trump has tweeted that he would proceed with an executive order if lawmakers maintain the deadlock.

Japan will publish this Friday, June Labor Cash Earnings and Overall Household Spending. Later into the day, the country will publish the preliminary estimate of the June Leading Economic Index, foreseen at 78.8 from 78.4 in the previous month. The Coincident Index for the same period is expected unchanged at 73.4.

The USD/JPY pair maintains its bearish bias according to intraday technical readings. The 4-hour chart shows that the 20 SMA is gaining bearish strength above the current level and below the larger ones. Technical indicators in the mentioned time-frame remain within negative levels, the Momentum heading lower and the RSI stable at around 48. The main support is the weekly low at 105.31, with a break below it opening doors for a steeper slide.

Support levels: 105.30 104.90 104.40

Resistance levels: 105.75 106.10 106.50  

GBPUSD

The GBP/USD pair has posted a higher high for this month, as the BOE underpinned the Sterling. The GBP/USD pair peaked at 1.3185, following the Bank of England monetary policy meeting, as policymakers decided to leave the current rate unchanged at 0.1% in a unanimous decision. Also, the growth forecast has suffered an upward revision, with the economy seen contracting this year by 9.5%, against a previous estimate of -14%. BOE’s Governor Bailey offered an optimistic speech, remarking that, while negative rates are part of the toolbox, they are not thinking on using them, but instead, suggested that they can do more QE or use new forms of forward guidance.

After BOE’s dust settled, the GBP/USD pair has spent most of the day consolidating in the 1.3150/60 price zone. The risk remains skewed to the upside, according to intraday readings, as the 4-hour chart shows that the pair continues to develop above a modestly bullish 20 SMA. The larger moving averages head higher well below the shorter one, as technical indicators remain well above their midlines, with uneven strength. The next directional move will depend on US employment data, which will set the tone for the greenback ahead of the weekly close.

Support levels: 1.3080 1.3035 1.2990

Resistance levels: 1.3165 1.3200 1.3250

AUDUSD

The AUD/USD pair is holding near its recent highs, and more relevantly, above the 0.7200 level, its best daily close since February 2019. The pair has spent most of the day in consolidative mode, getting boosted during US trading hours on the back of another round of dollar’s selling.  Gold prices continued to rally, with spot reaching a record high of $2,069.72 a troy ounce, a positive factor for the Aussie, alongside Wall Street’s positive tone.

 Early Friday, Australia will publish the AIG Performance of Services Index for July, previously at 41.5, while the RBA will release the statement of its latest monetary policy meeting. The Asian session will also bring the Chinese Trade Balance for July, expected with a surplus of $42B.

The AUD/USD pair is bullish, pressuring the highs in the 0.7240 price zone. The 4-hour chart shows that the rally may continue during the upcoming sessions. The 20 SMA continues advancing while providing intraday support, now at around 0.7170. The Momentum indicator maintains its bullish strength well into positive territory, while the RSI indicator consolidates at around 62.

Support levels: 0.7200 0.7160 0.7115  

Resistance levels: 0.7240 0.7285 0.7320

GOLD

As the USD index, DXY retreated to its lowest level in the last two years, Gold marched to its new all-time high at 2.069$ on Thursday. The yields on the benchmark 10-year US government bond dropped back closer to an all-time closing low level of 0.501% and further benefited the non-yielding. On the other hand, despite the massive rally seen in Gold, Wall Street is keeping its mood up with a strong rally. Earlier in the day, the DOL reported that the weekly Initial Jobless Claims decreased by 249,000 to 1,186,000 in the week ending August 31st in the US. While the current monetary policies are supporting the Gold rally, the risk appetite is surprisingly high based on the expectations of strong labour data readings, a possible deal on the new stimulus program and also a potential vaccine against the coronavirus. At this point, a technical correction triggered by the deal on the stimulus program might give the Gold rally a pause unless a solid outcome for the vaccine trials is announced.

Over the 2.000$ level, next targets upside can be followed at 2.100$ 2.200$ and 2.400$. Below the 2.000$ threshold, 1.980$, 1.950$ and 1.920$ levels can be followed as supports.

Support Levels: 1.980$ 1.950$ 1.920$

Resistance Levels: 2.100$ 2.200$ 2.400$       


SILVER

Silver jumped over 28.00$ level on Thursday as the impressive rally is intact for the precious metals. The decline in the USD continues dragging the yields to historic low levels. It is clear that the FED will not raise the interest rates at least for two years. Therefore, precious metals have huge support from the current monetary policies. Also, Silver specific catalyst is its industrial usage. As soon as the industrial demand for the white metal normalises, Silver will find extra support to extend its rally. As Silver continues to outperform Gold, the Gold to Silver ratio now normalises through 71.00 level after hitting 126.00 in March.

If Silver manages to stay over 27.00$, next targets upside might be followed at  29.28$ (March 2013 resistance), 30.00$ and 32.00$ levels. Below the 27.00$ level, the supports might be followed at 25.00$ and 24.00$ levels.

Support Levels: 27.00$ 25.00$ 24.00$

Resistance Levels: 29.28$ 30.00$ 32.00$


CRUDE WTI

WTI’s attempt to extend its move up to five-months high was short-lived and the black gold retreated below 42.00$ level on Thursday. The Energy Information Administration (EIA) data showed distillate stockpiles, which include diesel and heating oil, climbed to a 38-year high and gasoline inventories unexpectedly rose for a second week, per Reuters. On the other hand, the decline in the USD continues to support WTI but the uncertainty created by an ongoing pandemic is limiting the gains. Tomorrow’s labour data will be a major player for the WTI as they will reflect the economic activity and the demand for oil. On the oil supply side, Iraq's oil ministry and state oil marketer announced in a statement that Iraq will lower its oil output by an additional 400,000 barrels per day to compensate for its overproduction, as reported by Reuters. Iraq further reiterated that it's committed to the OPEC+ agreement and provided a boost to crude oil prices.

If WTI manages to hold over 42.00$, next targets upside can be followed at 44.00$ (February 2020 low), 48.64$ (March 2020 high) and 50.00$. Below the 42.00$ level, supports can be followed at 41.00$ and 40.00$ consolidation zone.

Support Levels: 42.00$ 41.00$ 40.00$

Resistance Levels: 44.00$ 48.64$ 50.00$  


DOWOWOW ENENENNE NEN

The upbeat mood continues in Wall Street with Nasdaq printing a new all-time high on Thursday. Also, both S&P and Dow Jones are heading back to their all-time high levels despite the risk events still persisting like the escalating tensions between the US and China, uncertainty regarding the elections in the US and aftermath of the pandemic. US President Donald Trump, who earlier in the week said that he could use executive orders to break the deadlock on coronavirus aid negotiations, reiterated that view on a Twitter post. "Upon departing the Oval Office for Ohio, I’ve notified my staff to continue working on an executive order with respect to the payroll tax cut, eviction protections, unemployment extensions and student loan repayment options," Trump Tweeted out. Hopes for a resolution in the stimulus package deal lifted the indexes as the markets are gearing up for today’s NFP data set.  Initial Jobless Claims advanced to 1.18M in the week ended July 31, despite the US employers announced  262,649 job cuts in the month, up 54% from June, according to the Challenger Job Cuts report after the gloomy ADP data.

If Dow Jones keeps its stance over 27.000 level decisively, 27.583 (June 2020 high), 28.000 and 28.402  levels can be followed as resistances. Below the 27.000 level, the supports can be followed at 26.000, 25.210 (29.568-18.158 %61.80) and 24.690 (2020 April-May resistance) levels.     

Support Levels: 26.000 25.210 24.690

Resistance Levels: 27.583 28.000 28.402

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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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