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Daily Market Report
19 Mar 2020

EURUSD

Fretting investors blindly bought the greenback this Wednesday, with major currencies plummeting to multi-year and even multi-decade lows against their American rival. The EUR/USD pair attempted to regain the 1.1000 figure but finally collapsed to 1.0807, approaching this year low at 1.0777. Despite governments and central bankers have decided to flood the financial system with liquidity, the coronavirus pandemic gives no break. Still expanding exponentially in Europe, and growing rapidly in the southern hemisphere, world economies are on pause, and recession sounds loud. And worse, there’s no end at sight to this situation.

Meanwhile, German Chancellor Angela Merkel,  said that Germany would do “whatever is necessary,” to limit the impact of the outbreak,  although so far, the country has discussed more conservative measures. Uncertainty is high, which worsens the negative sentiment. In the data front, the EU confirmed February inflation at 1.2% YoY, while the US reported that Building Permits fell 5.5% in February, worse than anticipated, while Housing Starts were down by 1.5%, against an expected 4.9% decline.

The EUR/USD pair has bounced from the mentioned low and trades in the 1.0830 region ahead of the close, retaining its bearish technical stance. In the 4-hour chart, the pair has met resistance around a flat 200 SMA, now developing below all of its moving averages, and with the 20 SMA accelerating its slump, reflecting sellers’ strength. Technical indicators pared their declines, hovering now in oversold levels and far from indicating the slump is over.   

Support levels: 1.0805 1.0770 1.0735

Resistance levels: 1.0860 1.0900 1.0940

USDJPY

The USD/JPY pair surged to 108.65, its highest since February, as the brutal dollar’s demand overshadowed yen’s safe-haven condition. The pair eased by the end of the American session, finally weighed by the dominant sour sentiment, although it held above 108.00. Underpinning the pair, US Treasury yields advanced, with the yield on the benchmark 10-year Treasury note hitting 1.27%, to settle not far below it.

Japan published at the beginning of the day, the February Merchandise Trade Balance at the beginning of the day, which posted an impressive surplus of ¥1109.8B. Imports declined 14%, while exports contracted 1.0% in the same month, better than anticipated. Early Thursday, the country will release February National inflation, foreseen at 0.8% YoY from 0.7% previously.

The USD/JPY pair is now trading above the 61.8% retracement of its latest daily slump at 108.00. The 4-hour chart shows that the pair was unable to extend its gains beyond a mild-bearish 200 SMA, but it holds above the 20 and 100 SMA, both converging around 106.80/90. The Momentum indicator holds near its daily highs, while the RSI eases modestly after nearing overbought levels. Overall, the risk remains skewed to the upside, with further gains expected should dollar demand continue.

Support levels: 108.00 107.60 107.15  

Resistance levels: 108.65 109.00 109.35

GBPUSD

The GBP/USD pair plunged to its lowest since 1985, trading as low as 1.1450 during US trading, although later bouncing to the 1.1650 price zone. The latest slump was triggered by headlines indicating that the UK death toll amid coronavirus rose 55% in one day, now up to 104. The UK has refused to apply lockdown measures and has taken a lighter approach to the coronavirus outbreak, partially explaining Sterling’s collapse. This Wednesday, news headlines indicated that the UK would finally close schools on Friday, but still, no lockdown or travel bans announced. The global panic and Wall Street´s indexes triggering the circuit breaker again, for sure added to the negative performance of the pair.

The GBP/USD pair remains extremely volatile, and despite being extremely oversold, the risk remains skewed to the downside. The 4-hour chart shows that the 20 SMA accelerates well above the current level, having trouble to catch up with price amid the brutal slide. Technical indicators in the mentioned time-frame are currently standing at extreme readings, with the RSI now at 12. There are no particular signs indicating downside exhaustion, and in fact, the daily chart shows that technical indicators continue heading firmly lower despite being in extreme levels.

Support levels:  1.1590 1.1545 1.1490  

Resistance levels: 1.1660 1.1720 1.1770

AUDUSD

Commodity-linked currencies were among the worst performers this Wednesday, with the AUD/USD pair falling to 0.5701, a level that was last seen in January 2003. The Aussie suffered from the ruling panic and need of funding, which sent speculative interest into the greenback, but was also affected by local data. The Australian Westpac Leading Index came in at -0.42% MoM in February, far below the previous, within contraction territory for the fifteenth consecutive month.

Australia is having a busy Thursday, as the country will publish February employment data, while the RBA has an emergency monetary policy. The country is expected to have added 10,000 new jobs in the month, while the unemployment rate is expected to remain unchanged at 5.3%. In January, the country added 13.5K, with 46.2K full-time positions added and part-time jobs down by 32.7K.  As for the RBA, the central bank is expected to cut rates by 25 bps to a record low of 0.25%. Policymakers would likely announce additional stimulus measures.

The AUD/USD pair bounced from the mentioned low, currently trading in the 0.5770 price zone. The pair has fallen for eighth consecutive days, and despite being extremely oversold, it gives no signs of changing course. In the 4-hour chart, it keeps developing below all of its moving averages, which maintain their downward slopes. Technical indicators stand within extreme oversold levels, barely losing their strength downward.

Support levels: 0.5750 0.5700 0.5640

Resistance levels: 0.5860 0.5900 0.5940 

GOLD

Gold had another wide range volatile trading session on Wednesday as the flight to liquidity still dominates the markets. Although FED announced cash injection to markets and slashed the interest rates, the USD index DXY is keeping its momentum up testing 101 levels with the fears of a possible cash shortage. On the other hand, the 10-year US Treasury bond yield is staging a decisive rebound lifting over %1 to %1.62.

Gold tested 1.470$ zones on Wednesday close to its 2020 lows but bounced back trying to keep its 1.500$ level on Wednesday. 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$


SILVER

Silver slid below 12.00$ level on Wednesday hitting its lowest level since 2009 as the flight to liquidity dominated the market amid the coronavirus pandemic. Unlike normal low-interest-rate times, instead of non-yielding metals, markets this time prefered USD, US treasuries, JPY and CHF this time. Also, the traders tried to cash their positions in precious metals to avoid margin calls caused by sell-off conditions in the equity markets.    

Below the 12.00$ level, next targets downside can be followed at 11.63$ (2020 low), 10.00$ and 8.40$ (2008 dip). Above the 12.00$ level, the resistances can be followed at 13.00$, 14.29$ (2019 dip) and 15.00$ levels. 

Support Levels: 12.00$ 11.63$ 10.00$

Resistance Levels: 13.00$ 14.29$ 15.00$


CRUDE WTI

The meltdown in the equity and energy markets is still intact as WTI tested 20.00$ level which is lowest since 2002. The EIA reported a nearly 2M barrels build during last week, adding to the previous 7.7M barrels increase. In addition, Weekly Distillate Stocks went down by 2.94M barrels during last week and Gasoline Inventories decreased by 6.180M barrels, more than doubling forecasts and adding to the previous 5M barrels drop. Further data saw stockpiles at Cushing increasing by 0.563M barrels (from 0.704M barrels). Although the increase in stock data is less than expected, global recession fears and output battle between Saudi Arabia and Russia is dominating the oil market.

WTI sank to 20.00$ zone from 65.50$ just in three months. Below the 22.00$ the supports can be seen at 20.00$ (2020 dip) and  17.13$ (2001 dip). Over the 23.00$ the resistances can be followed at 24.75$ (2002-2003 double support) and 26.00$ (2016 dip).

Support Levels: 22.00$ 20.00$ 17.13$

Resistance Levels: 23.00$ 24.75$ 26.00$ 


DOW JONES

As the meltdown in the equity markets continues, Dow Jones sank to its lowest level since late 2016 sliding below 19.000 levels. Fears of a worse than expected global recession caused by the coronavirus pandemic is pressuring the markets and causing the flight to liquidity. US President Donald Trump said on Wednesday that the potential for a 20% unemployment amid the coronavirus outbreak was a "worst-case scenario" and added that they were nowhere near it. However, the markets did not credit the president’s statement and Dow Jones erased all of its gains made after Trump took the office. On the other hand, The Senate on Wednesday voted 90-8 to approve a House-passed coronavirus bill that targets paid leave and testing, as lawmakers and the Trump administration already are looking ahead to other, broader measures that could stimulate the U.S. economy and help workers against the possible recession caused by the coronavirus pandemic.  

Dow Jones ended the day below 20.000 level at 19.898. As long as the index stays below 20.000 level, next targets can be followed at 18.917(2020 dip), 17.889 (the lowest level since October 2016) and 17.000 levels. Over the 20.000 level, the resistances can be followed at 21.000 and 21.700 (2018 dip).

Support Levels: 18.917 17.889 17.000

Resistance Levels: 20.000 21.000 21.700         


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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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