Daily Market Report
11 Dec 2020

EURUSD

The EUR/USD pair moved within Wednesday’s range during Thursday despite the European Union summit, the European Central Bank meeting, US data and the new chapter in the Brexit drama. The pair reached a four-day high at 1.2160 during the American session and after all the events at the ECB. The move higher was mostly supported by a weaker US dollar rather than by a stronger euro. The pair then pulled back, holding above 1.2100. Ahead of the Asian session, it is looking at the 1.2160 area with a positive bias but not looking very strong.

The ECB increased its emergency purchase program by EUR500bn and extended it at least to March 2022. The TLTRO-III will also be extended, and more longer-term refinance operations were announced for 2021, to provide liquidity. Regarding the euro, the central bank reiterated it has no exchange rate target and will continue to monitor developments in FX. The euro rose after the ECB meeting and Lagarde’s press conference, only modestly.

In the US, initial jobless claims unexpectedly jumped to the highest in ten weeks to 853K. Also, continuing claims rose. In November the CPI rose 0.2%. US yields held relatively steady while equity prices in Wall Street were mixed. House Speaker Pelosi and Treasury Secretary Steven Mnuchin mentioned progress regarding a new stimulus package. Claims data could help increase negotiations, probably supporting Wall Street.

The EUR/USD pair ended Thursday with a bullish bias but still in the recent range and limited by 1.2160. The longer it takes to break above 1.2160/70, the more likely a bearish correction will gain speed. Technical indicators in the 4-hour chart are biased to the upside, showing no much strength and pointing to more consolidation ahead. A slide below 1.2100 would likely expose 1.2080 and then the weekly low at 1.2057.

Support levels: 1.2090 1.2065 1.2035

Resistance levels: 1.2160 1.2200 1.2230


USDJPY

The USD/JPY pair received a boost during the first half of the day on Thursday and reached an eight-day high at 104.58, but lost steam and erased intraday gains throughout the New York session. The US dollar came under renewed pressure following the release of disappointing jobless claims data and few signs of progress on stimulus negotiations in the US Congress. Risk sentiment deteriorated, favoring the safe-haven yen and pushing Wall Street indexes mostly lower. 

Following a few sessions in seesaw-mode, technical indicators have turned flat, not only in the 4-hour chart but also in the daily chart. In the meantime, the USD/JPY pair consolidates between the 100- and the 200-period SMA in the 4-hour, giving no clear cues for the upcoming sessions. Given USD's recent weakness, bears could have the upper hand with an immediate downside target seen at the 104.00 psychological level, which remains critical in the short-term. On the other hand, the pair needs a sustained move above 104.40 to tilt the bias in favor of the bulls. 

Support levels: 104.00 103.85 103.60 

Resistance levels: 104.40 104.75 105.00

GBPUSD

The GBP/USD pair ended lower on Thursday, hovering under 1.3300. The pair was unable to benefit from a weaker US dollar as the pound remains under pressure on the lack of an agreement between the European Union and the United Kingdom. Since the American session, the pair has been consolidating near 1.3300, looking vulnerable.

Economic data in the UK showed growth slowed in the three months to October, but slightly above expectations. The outlook faces many challenges with coronavirus cases and the Brexit materialization. Dinner on Wednesday, between UK PM Johnson and EU President Ursula von der Leyen did not end in an agreement. Negotiations will continue until Sunday, the new critical day for the Brexit drama. The EU published a contingency plan for a no-deal.

A decline of the US dollar kept cable weekly lows. The unexpected rise in US initial jobless claims to the highest level in months did not help the greenback. Talks for new stimulus continue in the US and could offer some support to Wall Street. Still, like Brexit, a last-minute deal is seen but the deadline keeps moving further away.

The GBP/USD pair looks increasingly bearish; however, it showed some strength by holding above 1.3250. A consolidation below would expose the weekly low and the 1.3200 area. Price stands below key moving averages in 4-hour charts and technical indicators favor the downside. A recovery above 1.3380 would alleviate the bearish pressure.

Support levels: 1.3220 1.3155 1.3080

Resistance levels: 1.3360 1.3405 1.3480


AUDUSD

The AUD/USD extended its march higher on Thursday and climbed above the 0.7500 level for the first time since June 2018, mainly driven by broad-based US dollar weakness and surging commodity prices. Additionally, a string of stronger-than-expected Australian data releases this week has also contributed to the rally.  By the end of the American session, the AUD/USD pair holds onto a 1.25% daily gain, hovering just a couple of pips below the multi-year high struck earlier at 0.7538.

While the short-term technical picture remains strongly bullish, the RSI has already reached overbought conditions, favoring a corrective move before another leg higher. In case of a setback, the 20-period SMA in the 4-hour chart at 0.7450 is the first support in line, followed by the 0.7400 psychological level. On the flip side, a decisive break above 0.7540 could pave the way towards the 0.7580 zone en-route to the next milestone at 0.7600.

Support levels: 0.7450 0.7400 0.7350 

Resistance levels: 0.7540 0.7580 0.7600

GOLD

Once again gold broke its usual trading pattern on Thursday. Despite the USD index DXY slip sub-91.00 again, also Gold stayed under pressure testing this week’s lows around $1,830. US Treasury Secretary Steven Mnuchin has said that senators from both parties are making progress on stimulus talks and more meetings were scheduled for later on Thursday. Despite the supportive messages, the uncertainty in the stimulus deal still pressures the precious metals. On the other hand, Pfizer&BioNTech vaccine will most likely get approval from the FDA this week. Despite the emergency use approval, the effect of the vaccine will take a long time to measure. Thursday’s Initial Jobless Claims reading was below the expectations indicating the continuous disruption in the labour data readings limiting the retracement seen in Gold.  

From the technical point of view, below the $1,860 level, the supports can be followed at $1,800, $1,763 ($1,451-$2,075 61.80%) and $1,700 levels. Over the $1,860 level, the resistances can be followed at $1,900 with $1,956 ($1,451-$2,075 38.20%) and $2,000 levels.

Support Levels: $1,800 $1,763 $1,700

Resistance Levels: $1,900 $1,956 $2,000


SILVER

Silver managed to stay in the positive zone on Thursday despite the decline seen in Gold. The USD index DXY had a negative day sliding below 91.00 levels while Gold failed to capitalise the move. On the other hand, Gold to Silver ratio retraced below 77.00 levels indicating the better performance from Silver. As the stimulus debate continues, the uncertainty hurts the precious metals. At this point, Silver needs solid support such as a stimulus deal to advance over the $25.00.   

Below the $22.90 level ($11.63-$29.86 38.20%), the supports can be followed at $20.75 ($11.63-$29.86 50.00%) and $18.42 ($11.63-$29.86 61.80%). Over the $22.90 level, the targets up can be followed at $25.21 ($11.63-$29.86 23.60%), $26.00 (August-September support), $27.00 and $28.00 levels.

Support Levels: $22.90 $20.75 $18.42

Resistance Levels: $25.21 $26.00 $27.00        


CRUDE WTI

The vaccine optimism kicked in for WTI once again as the black gold hit its fresh 7-month highs testing above $47.00 levels. The move came despite the stocks built in the US which were supported mostly by the possible FDA approval optimism. On Wednesday, the US Department of Health and Human Services (HHS) noted that vaccinations with Pfizer-BioNTech COVID-19 vaccine could start next week. The US Food and Drug Administration's (FDA) is largely expected to authorize the emergency use of Pfizer's and Moderna's coronavirus vaccines before the end of the week. Also, OPEC and non-OPEC producers last week finally reached an agreement on crude oil output in 2021, investors' focus shifted to the energy demand outlook. Vaccine optimism and better prospects for additional stimulus in the US revive hopes for a steady recovery in oil demand.

Next supports can be seen at 45.00$, 43.88$ and 43.00$ respectively while the resistances can be followed at 47.00$ and 48.50$.

Support Levels: 45.00$ 43.88$ 43.00$

Resistance Levels: 46.00$ 47.00$ 48.50$  


DOW JONES

Dow Jones kept its technical correction on Thursday sliding below 30,000 levels despite the vaccine optimism. The reported allergic reactions to Pfizer-BioNTech COVID-19 vaccine will be a part of the US Food and Drug Administration's (FDA) considerations during the review, an official for the US Department of Health and Human Services (HHS) said on Wednesday, per Reuters. The official further noted that Pfizer's vaccine could receive an emergency use approval within days of the FDA meeting and said vaccinations could start next week. On the other hand, Steve Mnuchin stated on Thursday that they were making a lot of progress towards a potential deal. Despite the positive messages, Congress needs to pass a deal by the 18 December deadline and a possible delay will most likely hurt risk appetite. There were 853,000 initial claims for unemployment benefits in the US during the week ending December 5th, the data published by the US Department of Labor (DOL) revealed on Thursday. This reading followed last week's print of 716,000 (revised from 712,000) and missed the market expectation of 725,000 by a wide margin as a clear indication of the disruption seen in the labour market due to lockdown measures. Further technical correction might be on the table for Dow Jones as a result of profit-taking as the only driver for the index seems like the stimulus deal.   

From the technical point of view, if the index stays over 29,000, 29,500 and 30,000 levels can be followed as new targets high while below the 28,400 level, 28,000 and 27,770 can be followed as supports.

Support Levels: 28,400 28,000 27,770

Resistance Levels: 29,500 30,000 30,500


MACROECONOMIC EVENTS

MACROECONOMIC EVENTS