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Daily Market Report
17 Mar 2020

EURUSD

The EUR/USD pair shed some of its early gains this Monday, ending the day with gains in the 1.1160 area. The pair early soared to 1.1236, with the dollar starting the week on its left foot, following a surprise action from the US Federal Reserve. The central bank slashed rates by 100 bps and announced monetary stimulus of $700 billion. The Fed also arranged to lower pricing on US dollar liquidity swap arrangements by 25 bps with other major central banks such as the BOC, the BOE, the BOJ, the ECB and the SNB. The RBNZ cut rates also at the beginning of the week, while the BOJ announced monetary stimulus measures. The news, rather than fueling the relief seen last Friday, spurred risk-aversion, with DJIA futures immediately losing 900 points. Trading was interrupted in futures, and later within the session, as US indexes collapsed again, losing over 9.0% each.

The market is no longer talking about concerns of a global economic downturn, but of real recessions, as more countries add to lockdown, travel bans, and quarantines for most citizens. Commodities collapsed alongside US government yields, amid renewed demand for safety.  The US released the NY Empire State Manufacturing Index, which plummeted to -21.5 in March, far worse than the 4 expected and the previous 12.

This Tuesday, Germany will release the March ZEW Survey on Economic Sentiment, seen improving in the EU although plummeting in the country. A disappointing headline also for the Union should not be a surprise. The US will release February Retail Sales and Industrial Production for the same month. Seems unlikely the figures could have an impact on price action as those are old news before the coronavirus crisis took over the markets.

The EUR/USD pair has spent most of the American session trading in the 1.1160, quickly recovering from a session low of 1.1093. The pair topped for the day around the 38.2% retracement of its February/March rally but settled above the 50% retracement of the same slide. In the 4-hour chart, the pair remains below a bearish 20 SMA, but above a bullish 100 SMA. Technical indicators, in the meantime, remain within negative levels, without clear directional strength. The risk is skewed to the downside, with market players looking for a test and break of the 1.1050 level

 Support levels: 1.1145 1.1095 1.1050

Resistance levels: 1.1200 1.1235 1.1270 

USDJPY

The Japanese yen gapped higher against most major rivals against its major rivals at the weekly opening, with the USD/JPY pair falling to 105.15 after closing the mentioned gap. Market participants rushed into safety despite multiple central banks announced stimulus measures, as everything seems to little with the coronavirus crisis escalating worldwide. The emergency Fed’s rate cut was unable to calm investors, with US government bond yields trimming most of their Friday’s gains. The yield on the benchmark 10-year note fell to 0.63%, to settle at around 0.73%.

In the data front, Japanese data was encouraging, as Machinery Orders beat expectations in January, up by 2.9% in the month and down by 0.3% when compared to a year earlier. The country will release this Tuesday, January Industrial Production, seen down by 2.5% YoY, and Capacity Utilization, seen declining 0.5% in the month.

The USD/JPY pair has managed to bounce from around the 38.2% retracement of the latest daily slump at 105.35 a relevant support. In the 4-hour chart, the 20 SMA advances below the current price and just above the mentioned Fibonacci support, although the 100 SMA has accelerated its decline above the current level. Technical indicators have remained within positive levels, offering modest bullish slopes at the time being, falling short of supporting additional gains.

Support levels: 105.35 105.00 104.65

Resistance levels: 106.75 107.10 107.50

GBPUSD

The GBP/USD pair is down for a fifth consecutive day, falling this Monday to 1.2201, and settling nor far above the level. The pair started the day with a positive tone, hitting a daily high of 1.2424 on broad dollar’s weakness, but resumed its decline during Asian trading hours. Through the London session, UK PM Johnson announced he will discuss the latest developments in global markets and a coordinated action overnight with the new Bank of England Governor Bailey and Finance Minister Sunak, while the Bank of England later announced it will be offering US dollar repo operations with 84-week maturity starting this week.

This Tuesday, the UK will release its latest employment data. The ILO unemployment rate for the three months to January is seen steady at 3.8%, while average earnings including bonus, are seen at 3.0% from 2.9% previously. Excluding bonus, wages are seen steady at 3.2%. The number of unemployed people in the UK is seen rising to 21.4K in February after increasing by 5.5K in the previous month.

The GBP/USD pair is trading in the 1.2220 price zone, and at risk of extending its decline, as, in the 4-hour chart, the pair continues to develop below a firmly bearish 20 SMA, which extends its slide below the larger ones. The Momentum indicator in the mentioned time-frame recovers modestly but remains well below its mid-line, while the RSI consolidates around 21, all of which keeps the risk skewed to the downside.

Support levels: 1.2195 1.2140 1.2105

Resistance levels: 1.2250 1.2285 1.2320  

AUDUSD

The Australian dollar kept shedding ground against its American rival this Monday, down for a sixth consecutive day. The pair fell to 0.6078, its lowest since November 2008, heading into the Asian opening trading at around 0.6120. The pair peaked at 0.6303 at the beginning of the week, as the Fed’s unexpected decision to cut rates by 100 bps hit the greenback, although the movement was short-lived. The pair quickly turned south as equities plummeted, while commodities also came under strong selling pressure, as investors rushed into government bonds. The pair has bounced just modestly as demand for the greenback paused following dismal US data.

The RBA will release the Minutes of its latest meeting this Tuesday, although as it happens with other data, the market will probably see it as old news. More relevant, the Australian Central Bank has scheduled a meeting for next Thursday, and will likely cut rates further.

The AUD/USD pair is bearish according to the 4-hour chart, although extreme daily oversold conditions lift odds for a bullish corrective movement. Nevertheless, the short-term picture shows that technical indicators remain within negative levels, with the RSI consolidating within oversold levels, as the pair keeps developing below bearish moving averages.

Support levels: 0.6120 0.6090 0.6060

Resistance levels: 0.6225 0.6250 0.6280

 

GOLD

Gold had another wide range of trading session on Monday moving in a 125$ range intraday after FED’s big move on Sunday. The Federal Reserve cut interest rates and restarted quantitative easing to stimulate the economy hit by the pandemic of COVID-19. Under normal conditions in times like these, Gold should benefit the market conditions but as the situation in the equity markets is so bad, traders are desperate for cash to support their positions same as 2008 crisis. Basically, while the need for cash is pushing Gold down, future risk positioning is creating demand for Gold to buy from dips. Therefore, Gold tested its lowest level since late 2019 with 1.450$ but managed to bounce back to 1.500$ at the time of the writing.  

As long as the yellow metal stays over 1.500$ level, 1.514$ (%61.80 1.557$-1.445$), 1.530$ (%76.40 1.557$-1.445$) and 1.557$ (2019 peak) can be followed as resistances. Below the 1.500$ level, the support levels can be followed at 1.488$ (%38.20 1.557$-1.445$) and 1.472$ (%23.60 1.557$-1.445$) levels.

Support Levels: 1.500$ 1.488$ 1.472$

Resistance Levels: 1.514$ 1.530$ 1.557$

DOW JONES

Another extreme selling wave triggered the circuit breakers in Wall Street on Monday as COVID-19 pandemic spreads at a fast pace on a global scale. While the countries are taking extreme measures to stop the pandemic to spread such as travel and social gathering bans, those actions depress the markets with an expectation of a global recession. On the other hand, Trump’s comments sparked an extra selling wave as the president stated that worst of coronavirus pandemic might be over by July, August or even later. Also, Trump added that Americans should avoid gatherings of 10 people or more. 

Dow Jones had its worst daily decline on Monday slashing 3.000 points barely holding over 20.000 level. Below the 20.000 level, next targets might be followed at 19.680 (2017 dip) and 19.000. Over the 21.000 level, the resistances might be followed at 21.712 (2018 dip) and 22.000 levels.

Support Levels: 20.000 19.680 19.000

Resistance Levels: 21.000 21.712 22.000  


XAAAGU

Silver sank to its lowest level in 11 years as the desperate need for liquidity in the markets kicked in again on Monday. As the panic spread in the markets due to coronavirus pandemic the sell-off int he equity markets intensified with historic single-day losses observed. On the other hand, as the schema for precious metals are like the 2008 crisis, once the risk sentiment returns it is highly expected for Silver and Gold to incline aggressively. Therefore, the traders might be gearing for long positions as the precious metals are pushed to their oversold levels. 

Silver tested 11.78$ on Monday but managed to lift itself over 12.00$ at the time of the writing. Below the 12.00$ level, the targets might be followed at 11.78$ (11-year dip), 11.00$ and 10.00$ levels. Over the 13.00$ level, the resistances might be followed at 14.29$ (2019 dip) and 15.00$ levels.

Support Levels: 12.00$ 11.78$ 11.00$

Resistance Levels: 13.00$ 14.29$ 15.00$ 


OOOOII

WTI had another heavy selling wave on the first day of the trading week as the developments regarding the coronavirus pandemic keep depressing the markets. On the other hand, Saudi Arabia fueled the output crisis with Russia on Monday stating that they are planning to increase the oil output to full capacity. Even FED’s extreme move to support the markets did not help WTI and the equity markets as the fear of a global recession brewing with extreme measures taken by the governments.

WTI is likely to test the 2020 dip around 27.50$. Below that level, the targets can be followed at 26.11$ (2016 dip) and 24.75$ (2002-2003 dips) levels. Over the 30.00$ level, the resistances can be followed at 33.17$ (12-13 March 2020 resistance) and 36.20$ (11 March 2020 peak) levels.

Support Levels: 27.50$ 26.11$ 24.75$

Resistance Levels: 30.00$ 33.17$ 36.20$   


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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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