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Daily Market Report
18 Mar 2020

EURUSD

The American dollar has edged firmly higher against all of its major rivals this Tuesday, in another tense journey fulled of growth concerns and governments taking measures to palliate the coronavirus crisis. The US Federal Reserve announced plans to relaunch the Commercial Paper Funding Facility that was used during the 2007-2009 financial crisis to inject liquidity into the markets. Later in the day, US Secretary of the Treasury, Steven Mnuchin, urged the Senate to approve the bill passed by the House to deal with the coronavirus, while announcing a  new package of roughly $850 billion on relief aid. In a joint press conference with US President Trump, Mnuchin referred to possibly deferring corporate tax payments and sending checks to workers, adding that the government favours keeping markets open, although may need to shorten trading hours. Wall Street and government yields recovered with the news.

The German March ZEW Survey showed that Economic Sentiment collapsed to -49.5 in the Union, and  -49.5 in Germany. The assessment of the current situation in the country came in at -43.1, all of them much worse than anticipated. In the US, February Retail Sales resulted worse than anticipated, down in the month 0.5%, while the core reading printed 0.0% vs the expected 0.4%. Industrial Production in February increased by 0.6% while Capacity Utilization increase by less than expected to 77%.

This Wednesday, the Union will publish February inflation figures, while the US will unveil Building Permits and Housing Starts for the same month. None is expected to have much impact on price action.

The EUR/USD pair has recovered above the 1.1000 level, but it’s at risk of extending its slump, as it has broken below the 61.8% retracement of its February/March rally at 1.1050.  In the 4-hour chart, the pair is below all of its moving averages, with a bearish 20 SMA about to cross below the 100 SMA, both in the 1.1130 region. Technical indicators have recovered unevenly from oversold readings, but remain within negative levels, indicating the absence of buying interest. The pair could retest the year low at 1.0770 on a steady decline below 1.0950, now the immediate support.

Support levels: 1.0950 1.0920 1.0880

Resistance levels: 1.1015 1.1050 1.1090

USDJPY

The USD/JPY pair turned north this Tuesday, accelerating its advance during the American session toward the 108.00 level amid a nice comeback in US equities and government bond yields. The US government announced several relief measures to combat the ongoing crisis, while US President Trump declared that he believes that the economy will come back very rapidly. Earlier in the day, the Bank of Japan decided to purchase a record high of 120.4 billion yen of Japanese ETFs, after announcing at the beginning of the week, it would increase purchases up to 12 trillion yen per year.

Japanese data released this Tuesday beat expectations but remained far from impressive. Industrial Production in January rose 1.0% MoM, while it declined by 2.3% when compared to a year earlier. Capacity Utilization in the same month increased by 1.1%. This Wednesday, the country will publish February Trade Balance data.

The USD/JPY pair is trading a few pips below the 61.8% retracement of its latest daily slump at 108.00, the immediate resistance. The pair is trading at fresh weekly highs but below Friday’s peak. In the 4-hour chart, the pair has broken above a mild-bearish 100 SMA while the 20 SMA continues to advance below the current price and the larger moving averages. Technical indicators remain within positive levels, although the Momentum heads lower while the RSI consolidates, this last around 63. Chances of a firmer recovery should increase if the pair runs above 108.50, Friday’s high.

Support levels: 107.60 107.15 106.70

Resistance levels: 108.00 108.50 108.90

GBPUSD

The GBP/USD pair fell to 1.2000, its lowest since last September when the pair bottomed at 1.1957. As demand for the greenback persisted, the Pound suffered from the latest UK employment figures, which showed that the unemployment rate in the kingdom rose to 3.9% in January from 3.8%. The number of unemployed people in the same period was smaller than anticipated, increasing by 17.3K. In the three months to January, average earnings excluding bonus resulted at 3.1% vs 3.2% last and 3.2% expected while including bonuses came in at 3.1%  against  2.9% previous and 3.0% expected.

The pair recovered after the US government announced relief measures, while UK PM Johnson, in a joint statement with Finance Minister Sunak, declared that they must “do more and faster,” to stop the disease spreading and to no not overwhelm the health system, finally giving some positive signs. Sunak said that the government would provide 330 billion GBP worth of guaranteed loans for business to battle the crisis. About Brexit, PM Johnson added that the transition period would end as scheduled on December 31st.  The country won’t release relevant macroeconomic data this Wednesday.

The GBP/USD pair has recovered roughly 100 pips from the mentioned low but ended the day in the red. The pair remains extremely oversold in the daily chart, and technical readings give no sign of an upcoming turn. In the 4-hour chart, the potential of a bullish movement is also limited, as the pair keeps developing below a firmly bearish 20 SMA, currently at 1.2335, while technical indicators bounced, but hold well into the red with the RSI currently at 25.

Support levels: 1.2065 1.2030 1.1990

Resistance levels: 1.2140 1.2195 1.2240

AUDUSD

The AUD/USD pair has remained under selling pressure, falling to a fresh multi-year low of 0.5958, finishing the day not far above the level. The RBA released the Minutes of its latest Monetary Policy Meeting at the beginning of the day, which confirmed that the decision to cut the cash rate to 0.5% was driven by policymakers concerns about the impact of the coronavirus outbreak on the economy. The dollar’s self-strength kept the pair falling despite an improved market mood led to a positive close in US indexes. Australia will release this Wednesday the February Westpac Leading Index, previously at 0.05%.  

The AUD/USD pair is trading below the 0.6000 level extremely oversold in almost all time-frame under study, which lifts odds of an upward corrective movement. Nevertheless, the 4-hour chart shows that the risk is skewed to the downside, as technical indicators barely stalled their declines within extreme levels, while the pair keeps developing below a firmly bearish 20 SMA. The pair may well consolidate and post modest gains during the upcoming sessions, yet sellers will likely take their chances at higher levels.

Support levels: 0.5960 0.5925 0.5890

Resistance levels: 0.6010 0.6040 0.6075

SILVER

Silver again tested the upper-11.00$ level but managed to gain ground through 12.75$ level on Tuesday. Markets are facing extreme volatile days last seen on 2008 economic crisis triggered in the US as the uncertainty caused by the corona pandemic is driving the risk sentiment on the markets. The market mood is shifting between the need for cash to support equity market positions to safe-haven demand. As a result, markets are experiencing extreme wide intraday trading ranges.

Silver again tested 11.80$ zones 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$


DOW JONES

After dipping to levels last seen on 2017, Dow Jones managed to pick up the pace and lifted itself over 21.000 levels on Tuesday trading. The bloodbath seen on the equity markets caused by the extreme coronavirus pandemic will likely dominate the risk sentiment for a longer time. As the governments are taking extreme measures like limiting public gatherings, banning international and domestic travel will definitely create an economic slowdown on a global scale. As FED acted by announcing an easing program and slashing the interest rates, also according to a Reuters report, the Federal Reserve is planning to relaunch the Commercial Paper Funding Facility (CPFF) that was used during the 2007-2009 financial crisis to inject liquidity into the markets. As the USD is dominating the markets with the need for cash to support the equity market open positions, DXY lifted to its three weeks high getting close to 100 levels on Tuesday. 

Below the 21.000 level, next targets can be followed at 20.000 and 19.620 (2017 dip) levels. Over the 21.700 level (2018 dip) the resistances can be followed at 22.000 and 23.500 levels.

Support Levels: 21.000 20.000 19.620

Resistance Levels: 21.700 22.000 23.500  


GOLLDD

Flight to cash shifted to flight to safety on Tuesday as Gold dipped to 1.465$ on the first half of the day and then spiked to 1.554$. While the US government is trying its best to support the markets verbally, FED’s interest rate and QE move showed a weak effect on the markets. On the other hand, the traders decided to buy from the dips betting on a mid-term resolution in the markets lifting Wall Street from its lows while physical Gold demand also inclined. 

On the technical side, over the 1.530$ (%76.40 1.557$-1.445$) resistance, 1.557$ (2019 peak), 1.600$ and 1.615$ can be followed as resistances. Below the 1.530$ (%76.40 1.557$-1.445$) level, the support levels can be followed at 1.514$ (%61.80 1.557$-1.445$) and 1.500$ levels.

Support Levels: 1.530$ 1.514$ 1.500$

Resistance Levels: 1.557$ 1.600$ 1.615$


OOIOIO

While the fears of a global recession triggered by the corona pandemic put the oil prices under heavy selling pressure, the output between Saudi Arabia and Russia added extra pressure and pushed WTI to its lowest level since 2016. Saudi Arabia stated that they plan to increase its oil exports by around 10M BPD in April-May, adding extra pressure to the already fragile scenario between the two oil-producers. As a result of the latest developments, due to the latest CFTC Positioning Report, net long positions sank to its lowest level since late October 2019. On the other hand, low energy prices might help already depressed economies in terms of lowering the costs.

The first support is watched at 26.00$ (2016 dip). Below this level, 24.75$ (2002-2003 support) and 17.05$ (2001 dip) levels can be followed. 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: 26.00$ 24.75$ 17.05$

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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