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Daily Market Report
09 Mar 2020

GOLD

Gold had another volatile day on Friday as the coronavirus outbreak still dominates the market. Although the trading range was almost 50$ on Friday, Gold ended the day slightly over the opening level. The USD and the equity market attempted a recovery on Friday caused the volatile session. However, the day again ended with risk-aversion with Gold on a positive level and Wall Street retraced back although better than expected NFP data set. On Friday state of emergency was declared in New York while the number of new cases kept escalating in the US. On the other hand, Italy is experiencing more extreme lock-down as Giuseppe Conte, Italy's Prime Minister has signed a decree that severely limits transport in the region of Lombardy – which includes Milan – and other northern provinces as the government attempts to stop the spread of coronavirus. The government bans entry to and exit from Lombardy and closes down cinemas, theatres, gyms, pubs, and discos. Funerals and weddings are also forbidden. Nicola Zingaretti, the leader of Italy's Democratic Party, announced on Saturday that he tested positive for coronavirus. The number of Covid-19 cases nears 6,000, with the death toll reaching 223. Also, reports of first cases started to emerge in Europe alongside the rising death toll in Iran including government officials. As governments all around the world try to limit public gatherings, Saudi Arabia also paused visits to Mecca. Data wise, on Wednesday the markets will focus on the CPI data set in the US as it has direct implications to FED’s monetary policy and the USD.

From the technical point of view, if Gold manages to stay over 1.650$ level, the resistances might be followed at 1.700$, 1.750$(December 2012 peak) and 1.785$ (2012 multi-time peak). Below the 1.650$, the supports might be followed at 1.615$, 1.600$ and 1.557$.

Support Levels: 1.650$ 1.615$ 1.600$

Resistance Levels: 1.700$ 1.750$ 1.785$   

DOW JONES

Even the better than expected NFP data set did not help Dow Jones as the index ended the day with %1.0 decline compared to the previous day. Coronavirus outbreak is now seen in 30 states with 470 cases in the US and also 19 confirmed deaths reported. The outbreak keeps escalating outside China especially in Italy which caused a quarantine of the north-region with a population of 15 million. Non-farm payrolls rose 273,000 (Expected 175.000) last month as the U-3 unemployment rate dropped to 3.5% equaling its lowest level in half a century, reported the Labor Department on Friday. However, the data set was measured before the coronavirus outbreak hit the US. This week, all eyes will be at the US CPI data set which is the main indicator for FED’s monetary policy decision as we head into March 18 FOMC.

The first target downside is no lined at 25.000 level and below that, 24.680 level (June 2019 and 28 February Low) and 24.000 levels can be followed. Above the 26.000 level, the resistances might be followed at 26.500 and 27.000 levels.

Support Levels: 25.000 24.680 24.000

Resistance Levels: 26.000 26.500 27.000  


USDJJJ

Again on Friday, stocks tumbled, oil prices collapsed and government-bond yields hit new lows, ending a dramatic week for financial markets that included an emergency rate cut from the Federal Reserve. The growing spread of the coronavirus and global growth expectations tuned the panic button on. As long as it is on, yen’s strength will remain intact. US data on Friday included a better-than-expected employment report, but it did not offer relief for the US dollar versus the yen. Risk aversion and bond yields will continue to be the critical factor for the pair. Positive global news, related to COVID-19 or some kind of global coordinated fiscal stimulus, could favour a rebound in USD/JPY.

Since February 20, the pair has fallen more than 700 pips. Despite the aggressive decline, more losses seem likely if fear persists and despite the oversold readings across technical indicators. On Friday, USD/JPY traded below 105.00 for the first time since August, but it managed to stabilize above 105.00. The substantial support area around 105.00 is under pressure, and a break lower would clear the way to more losses. Potential support emerges at 104.75 (March 2018 low) followed by 104.40. If the pair remains above 105.00, some consolidation around 105.50 seems likely. Above the next resistance lies at  106.20 and then the strong zone around 106.60.

Support levels: 105.00 104.65 104.40

Resistance levels: 105.80 106.10 106.75


GBPUUU

GBP/USD rose on Friday for the fourth day in a row, climbing above 1.3000, thanks to a weak US dollar. The greenback dropped further against G10 currencies even despite better-than-expected US data. The employment report showed payrolls rose by 273K in February surpassing expectations of 175K and the unemployment rate dropped back to 3.5% (the 50-year low). Milder weather likely boosted numbers, but still, economic data remains irrelevant as investors focus on the impact of the coronavirus. After the Fed emergency rate cut and as more easing is seen in the US, speculations about a rate cut by the Bank of England at the first meeting with Andrew Bailey as Governor are on the rise, not affecting the pound at the moment. UK GDP data is due on Wednesday, but the key event for the pound will likely be the release of the UK budget. On a wider perspective, beyond coronavirus and panic, Brexit trade negotiations will continue to be a risk factor for GBP.

The GBP/USD four-day rally will likely be challenged on Monday. For the rally to continue the pound needs to break and hold above 1.3060/70 (mid-February highs) resistance area. The daily and the four hours chart is clearly bullish. Price is above the 20-day SMA and Momentum crossing the 100 level, another positive sign for the pound. Above 1.3070, 1.3100 would be exposed and the next resistance stands at 1.3140. A failure here could set the tone for a modest correction. The initial support stands at 1.3020, followed by 1.2900. Only below 1.2860, the outlook would turn bearish.

Support levels: 1.2990 1.2940 1.2880

Resistance levels: 1.3070 1.3120 1.3175

AAAUUD

Despite another wild week at Wall Street, the AUD/USD pair rose, recovering from multi-year lows, driven by dollar’s weakness and not from a positive environment for risk. The panic across markets will limit gains. Chinese data over the weekend showed a larger than expected decline in Chinese exports and imports and could weight at the opening on the pair. The economic calendar ahead is light, and market participants will continue to focus on coronavirus headlines and monetary policy expectations.

The pair rebounded sharply from below 0.6500, but technical indicators so far are not at extreme levels. The resistance area around 0.6660 capped the advance. Price is marginally above the 20-day SMA. The daily chart shows the pair trading at a strong resistance level; if it rises clearly above 0.6660/70, 0.6700 would be on the cards. The next relevant resistance stands at 0.6745. The four-hours chart shows a more positive outlook as price stands above the 20 and 100 SMA. A slide below 0.6580 would weaken the outlook.

Support levels: 0.6620 0.6580 0.6540

Resistance levels: 0.6660 0.6705 0.6735


XAAAGU

Silver also had an extremely volatile session following the Gold trade. After the previous week’s disaster with a decline of %10 on a weekly basis, Silver managed to end its best week since August with %5.22 incline. While the coronavirus outbreak is the main driver in the markets, which also triggered FED’s emergency interest rate cut shifted the market direction dramatically. Silver trading will likely to continue shifting between the safe-haven demand and industrial metal demand which will keep on creating the volatility.

If Silver tests below the important 17.00$ level, the supports can be followed at 16.33$ (%61.8 14.29$-19.65$) and 15.55$ (%76.40 14.29$-19.65$) can be targeted. On the top side, the resistances are lined at 17.60$ (%38.20 14.29$-19.65$), 18.38$ (%23.6 14.29$-19.65$) and over that 18.70$.

Support Levels: 16.97$ 16.33$ 15.55$

Resistance Levels: 17.60$ 18.38$ 18.70$

EEEURU

EUR/USD climbed to the highest level since June on Friday at 1.1351 and then pulled back, closing the week slightly below 1.1300. Over the week it rose 250 pips and during the last two, gained 450 pips, making a dramatic recovery from near 1.0800, the lowest since April 2017. Initially, expectations of a rate cut from the Federal Reserve triggered the rally and later, on Tuesday, the US central bank shocked markets with a 50bps emergency rate cut that boosted the pair further. Markets are pricing more action from the Fed but the top-tier event of the week is the European Central Bank meeting on Thursday. Volatility will likely continue to be above average, and the impact of the coronavirus outbreak continue to play a crucial role.

German manufacturing data for January is due on Monday. In the US, the only two relevant reports over the week will be inflation on Wednesday and Consumer Confidence on Friday. Data reports may be irrelevant for the moment as market participants focus on coronavirus-related growth concerns. Expectations ahead of Thursday’s ECB meeting will also affect the euro.

After having the biggest weekly jump in more than three years, EUR/USD might be due for a consolidation. Still, as panic continues to dominate markets, high volatility could spark sharp moves anytime. From a technical perspective, the pair maintains the bullish tone. The RSI and Momentum in the weekly and daily charts are at overbought levels, but still headed north. Friday’s close far from the peak offers a sign of some exhaustion in the rally of the euro, suggesting the pair may take a breather before next move. If the bearish correction that started on Friday goes on, the immediate support stands at 1.1245 and then comes the strong 1.1200 (uptrend line, horizontal level and the 20-SMA in four-hours chart). A slide below 1.1200 would point to a stronger US dollar. On the other hand, if the euro rises above 1.1330, it could test recent highs around 1.1350. The 1.1350 contains the 100 and 200-SMA in the weekly chart, so it is expected to continue to offer strong resistance. A break higher would clear the way toward 1.1400.

Support levels: 1.1245 1.1200 1.1140

Resistance levels:  1.1330 1.1350 1.1390

OOOIII

As the coronavirus outbreak is escalating on a global scale, also OPEC’s last meeting put the last nail to the coffin as Russia reported to agree to extend the existing OPEC+ oil output cuts and won't back additional output cuts, due to Reuters on Friday, citing a high-level Russian source familiar with the matter. "Russia's position won't change," the source told Reuters. As the impact of the coronavirus outbreak already started to be seen on the Chinese macro data sets, fears of a global recession are dragging the equity and energy markets.

WTI tested levels last seen in July 2016 in a free-fall mode. If WTI slides below the 41.00$ level, the next targets might be seen at 40.00$ (2015-2016 support) and 39.00$ (2016 dip). Over the 42.00$ level (2016-2017 support), the resistances can be followed at 43.00$ and 44.00$ levels.

Support Levels: 41.00$ 40.00$ 39.00$

Resistance Levels: 42.00$ 43.00$ 44.00$    


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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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Please remember that trading financial markets carry a high degree of risk to your capital. It is possible to lose more than your initial stake. Leveraged products may not be suitable for all investors, therefore please ensure you fully understand the risks involved and seek independent advice if necessary.

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