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Daily Market Report
10 Mar 2020

GBPUSD

The pound rose against the US dollar on the day of the crash in energy markets, but it lagged versus its mains European rivals. Cable jumped at the beginning of the week to 1.3200, the highest level in a month but it then pulled back, stabilizing around 1.3100. A weaker US dollar boosted GBP/USD but at the same time, the extreme risk aversion limited the upside. After Monday’s crash, expectations about some easing from the Bank of England rose. The greenback, measured by the DXY dropped to the lowest since September 2018 but it climbed against emerging market currencies. UK data to be released over the week should be irrelevant. The budget presentation is the key event, but now somewhat offset. Trade negotiations between the UK and the EU should not produce relevant headlines in the near-term.

The daily close on Monday far from the peak is a sign of exhaustion to the upside but still another test of 1.3200 could take place. The mentioned area is the crucial resistance level now, after Cable rose above 1.3100. The daily chart favours some consolidation ahead between 1.3200 and 1.3020/40 with the underlying trend still bullish. A slide below the 20-day SMA at 1.2940 would invalidate the bullish bias, exposing the 1.2880 support area. The RSI and Momentum in the four hours chart turned to the downside, favouring the ongoing consolidation or even a possible correction to 1.3050.

Support levels: 1.3070  1.2990 1.2940

Resistance levels: 1.3150 1.3200 1.3230


GOLD

Gold had another volatile trading day almost like last Friday trading in a wide range and ending the day virtually unchanged. While the coronavirus headlines dominate the markets, another hit came from the energy market as the Saudis announced extreme measures on Sunday in response to Russia’s unwillingness to participate in deeper supply cuts by drastically slashing “Official Selling Prices” (OSPs) to Asian refiners for April. The move triggered a massive sell-off in the oil and equity markets as well as pushing the USD index DXY to 95.00 levels. As a result of the market fluctuation, Gold trading had an almost 50$ intra-day range between 1.650$ and 1.700$. As the coronavirus outbreak shows no signs of a slowdown, the risk sentiment will likely remain the same supporting Gold trade. Also, FED’s dovish monetary policy to support the US economy against setbacks caused by the virus outbreak is also supporting the non-yielding metal.

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$ 

SILVER

Silver again failed to benefit a safe-haven bull run and retraced back below 17.00$ level on the first day of the trading week. Like Gold trading, Silver had a wide range trading session on Monday between 16.50$ and 17.50$. However, the white metal failed to stay in the winning zone and gave away its daily gains sliding below 17.00$. On the other hand, Gold to silver ratio tests three-decade high, eyes 1991 level of 100. 

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$

CRUDE WTI

Oil prices had its worst trading session since the 1991 Gulf war on Monday as Saudi Arabia and Russia triggered a supply/price war. As the coronavirus outbreak triggered a panic sell in the oil markets with fears of a global slowdown and a decline in the demand, OPEC+ meeting failed to have a consensus for further production cuts as Russia opposed the idea. Following the unsuccessful meeting, Saudi Arabia struck back with slashing “Official Selling Prices” (OSPs) to Asian refiners for April. Saudi Arabia plans to boost its crude output above 10 million barrels per day (BPD) in April after the current deal to limit production expires at the end of March. Two sources told Reuters on Sunday. Saudi Arabia also cut its official crude selling price. The move created a massive sell-off in the Oil prices as the session started in Asia and pushed the oil prices %30 down on a daily basis. On the other hand, Russia responded to the event as they can lift the output and cope with low oil prices for six to ten years. As the markets in Russia were closed due to the national holiday, also EUR/RUB jumped to 85.00 zone with a bullish opening gap. 

Although the WTI tested mid-27.00$ as the first reaction, during the day a technical demand carried the black gold back to 31.00$ zones. Below the 31.00$ level, 27.40$ (9th of March dip) can be followed as the first target down as well as 26.00$ (February 2016 dip) and 25.00$ (2001-2001 support line). Above the 31.00$ level, 32.79$ (9th of March decline %38.20) and 34.45$ (9th of March decline %50.00) can be followed as resistances.

Support Levels: 31.00$ 27.40$ 26.00$

Resistance Levels: 32.79$ 34.45$ 36.12$   


DOW JONES

History will remember today as another black Monday as the equity markets around the globe collapsed due to conflict between Saudi Arabia and Russia regarding the oil output and prices. Dow Jones had its worst single-day trading session point-wise in history and worst decline since the financial crisis in 2008 slashing more than 2000 points and %7.8 while oil lost %30 in the market opening on a daily basis. indicating the heavy flight-to-safety, the CBOE Volatility Index, Wall Street's fear gauge is at its highest level since January 2009 at 60.17, up 44% on a daily basis. As the markets were already under selling pressure due to coronavirus outbreak fast-spreading globally, the conflict on energy price and output policy fueled a new sales wave in the markets. More and more the investors starting to believe that the coronavirus outbreak which might turn into a pandemic will trigger a global recession as the number of cases and casualties escalates all around the world. 

Dow Jones sank to its lowest level since January 2019 with 23.706. If the index slides below 23.000 level, 22.500 and 22.000 levels might be seen as new targets down. Over the 24.000 level, the resistances might be followed at 24.680 level (June 2019 and 28 February Low) and 25.000 levels.

Support Levels: 23.000 22.500 22.000

Resistance Levels: 24.000 24.680 25.000        


UUUSDD

A historic day for financial markets. Equity prices tumbled worldwide, and government bond yields dropped further. In the US for the first time, the entire curve fell below 1%. The fly to safety benefited the yen that rose sharply across the board. The currency was the best performer on the day Wall Street tumbled again. As long as market sentiment remains dominated by risk aversion, the yen will remain strong. A decline of USD/JPY below 100.00 is not seen as something improbable at the moment and more events like the 300-pips decline of Monday’s Asian session should not be ruled out. Fear is driving investors currently. A rebound in equity markets or even in USD/JPY, will likely be seen as a correction and probably as an opportunity to sell again. Potential announcements like bold monetary easing or a coordinated global fiscal expansion could spark a recovery of the dollar versus the yen.

Fear more than technicals are the critical driver at the moment for USD/JPY. The decline found support above 101.00. The rebound that followed was not strong enough to change the short-term bearish bias. Price is offering some signs of stabilization, but a decline below 101.80 could activate more volatility and a test of 101.55. Below the next support area arises at 101.00. A slide below 101.00 would set the attention on 100.00. If risk aversion persists volatile and prices under 100.00 should be on the cards. Over the short-term, a recovery above 102.80 (14.6% Fibonacci level of the slide from February 20) it could extend toward 103.50. Above, the upside should be limited by 104.20/30.

Support levels: 101.55 101.00 100.70

Resistance levels: 102.65 103.50 105.00


AAAAUD

Another wild day in markets with losses for stock prices not seen in years. The risk aversion initially pushed commodity currencies sharply lower versus the US dollar but later, they rebounded. Lower US yields weakened the demand for the greenback and helped AUD/USD not only to recover, but it even printed two-week highs. Later it pulled back, ending the day modestly lower. Risk aversion will likely continue to limit rallies on AUD/USD. In the case of more declines in equity markets, the Aussie should have difficulties staging a move to the upside like what it did on Monday. Concerns about the global growth outlook on the back of the coronavirus and the collapse in confidence after Monday’s sell-off are not positive factors for the pair in the short-term.  On Tuesday, during the Asian session, inflation data from China is due. Those numbers are not expected to have a significant influence offset by ongoing events. 

From Monday’s Asian session low, the AUD/USD rose more than 300 pips. It traded above the 0.6670 resistance area but it failed to hold on top and pulled back. Technical indicators after the sharp bounce show some strength in the aussie but for it to materialize, it needs to break and consolidate above 0.6650/70. For the next hours, the immediate support is located at 0.6580 while below that level, emerges 0.6540. A slide under 0.6540 would leave the pair exposed to more losses. 

Support levels: 0.6570 0.6505 0.6430

Resistance levels: 0.6650 0.6685 0.6750

EEEURU

The EUR/USD pair posted substantial gains on the day crude oil prices collapsed triggering chaos across financial markets. The German government said it will announce measures to bring liquidity to companies. After Monday’s events now some action from the European Central Bank on Thursday is expected. ECB could announce some kind of QE and even more. The rise in Italian government bond yields and the negative economic outlook could weigh on growth expectation at the EZ. On Tuesday, EZ Q4 GDP data is due. It is all pre-coronavirus, so those numbers are old and not relevant.  Attention will continue to focus on markets and potential announcements from government and central bank officials. The usual measures “to guarantee liquidity” could prove to be not enough. Mora rate cuts at the Federal Reserve are priced in and some analysts expect it to drop all the way to 0%.

The upside bias and Momentum remain healthy for the euro. Technical indicators in the daily and four hours chart show overbought extreme readings, but still not turning south. The rally of EUR/USD was capped by 1.1500 that is a significant barrier, likely to be rechallenged in the short-term. A consolidation above 1.1515 would point to further gains; the next resistance stands at 1.1570 (January 2019 high). If the euro fails at 1.1500 or breaks higher and then reverses, a correction will likely follow. The 1.1400 area has become the immediate support. The decline from current levels could extend to 1.1285/1.1300; as long as it remains above the upside bias will hold.

Support levels: 1.1360 1.1220 1.1100

Resistance levels:  1.1490 1.1515 1.1565

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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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