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Daily Market Report
26 Mar 2020

EURUSD

Things were quieter around the FX board this Wednesday, as market players continue to digest the latest announcement to counter the economic effects of the current global health crisis. The announcements, however, are being taken with a pinch of salt, as the coronavirus keeps spreading exponentially, mainly in Europe and the US. A peak, even in Italy, is not yet a sight. Among the latest measures, Germany lawmakers have agreed to suspend limits to the deficit spending, while US lawmakers agreed on a $2T  stimulus package that will likely be approved by Congress later this week.

The EUR/USD pair peaked at 1.0881, holding on to modest gains ahead of the Asian opening, as equities posted substantial gains for a second consecutive day. US Treasury yields also advanced a little, but as said, investors remain cautious amid the uncertain future of the world’s economies.

 Germany released the March IFO Survey, which was worse than expected. The Business Climate was confirmed at 86.1, following a preliminary estimate of 87.7. The US released February Durable Goods Orders, which were up by 1.2% in the month, much better than anticipated, although Non-defense  Capital Goods Orders ex Aircraft fell by 0.8%. This Thursday, Germany will release the April GFK Consumer Confidence Survey, seen at 7.1 vs 9.8 previously. The US will publish the final version of Q4 GDP, seen unchanged at 2.1%, but also weekly unemployment claims for the week ended March 20, seen soaring to 1,000K amid the ongoing crisis.

The EUR/USD pair is gaining bullish strength, currently surpassing the 23.6% retracement of its latest daily slump at 1.0840. In the 4-hour chart, the 20 SMA is slowly grinding higher below the current level, although the price remains well below the larger ones. Technical indicators hold above their midlines, the Momentum easing and the RSI flat slowly advancing at around 56. Beyond the weekly high, the pair has room to extend its gains towards the 1.0960 price zone, where it has the 38.2% retracement of the mentioned daily slump.

Support levels: 1.0840 1.0800 1.0750  

Resistance levels: 1.0885 1.0920 1.0960

USDJPY

The USD/JPY pair has spent the day consolidating above the 111.00 figure, unable to extend its gains beyond the weekly high at 111.70. It slid during US trading hours, as equities momentum weighed on the American currency. At the beginning of the day, the Bank of Japan published the Summary of Opinions, focused on the need for strengthening monetary stimulus amid the ongoing coronavirus crisis. Policymakers are concerned that the country could plunge into deep economic stagnation, despite the latest measures announced, and don’t expect a rebound once the virus is contained. The Japanese macroeconomic calendar has nothing of relevance to offer this Thursday.

The USD/JPY pair is trading in the 111.20 price zone, losing its bullish strength. In the 4-hour chart, the pair is anyway holding above a mild-bullish 20 SMA, although technical indicators keep easing within positive levels. The risk of a steeper decline is limited, as, given the upbeat sentiment, the yen’s demand will likely remain limited. Still, the pair could extend its decline in the short-term, particularly if it losses the 111.00 threshold.

Support levels: 111.00 110.70 110.20

Resistance levels: 111.60 111.90 112.25

GBPUSD

The GBP/USD pair was quite volatile, trading between 1.1638 and 1.1973, this last an over one-week high. The Sterling was backed by risk appetite, also supported by the UK´s decision to change its stance toward the coronavirus, announcing tougher measures, including a lockdown of the country. The pair fell to the mentioned low as the greenback temporarily recovered its poise, amid US equities trading in the red ahead of the opening.

The UK released February inflation data, although the market ignored the figures. Nevertheless, the yearly CPI was up 1.7% as expected. Producer Prices in the same month were down to negative territory, missing the market’s expectations. This Thursday, the Bank of England is scheduled to have a monthly monetary policy meeting. Governor Bailey had already debuted by slashing rates to 0.10% ahead of the meeting, while also expanding the APP to £645B. Chances of further action this time are limited, although given that it is Bailey’s first public appearance, investors will be looking for hints on future policies within his speech.

The GBP/USD pair trades at the upper half of the 1.18 handle near 1.1900 ahead of the close, as the positive momentum of equities is pressuring the greenback. The 4-hour chart shows that it quickly recovered from its daily low, suggesting that buying interest is strengthening. The 20 SMA remains flat below the current level while the 100 and 200 SMA maintain their bearish slopes above the current level. Technical indicators have picked up after some consolidation above their midlines, all of which skews the risk to the upside

Support levels: 1.1690 1.1650 1.1605

Resistance levels: 1.1740 1.1790 1.1830

AUDUSD

The AUD/USD pair advanced to 0.6073, its highest in over a week, although it trimmed gains ahead of the close, posting a modest daily advance. An upbeat market mood, with equities soaring globally, underpinned the pair at the beginning of the day. Also, the Australian January Conference Board Leading Economic Index increased 0,4%  to 106.9, boosting demand for the Aussie. The pair retreated during the American afternoon, despite Wall Street’s impressive rallies. Gold eased just modestly, hardly enough to explain the retracement. Instead, it seems that the AUD is out of investors’ radar at the time being.

Now trading at around 0.5960, the AUD/USD pair is holding on to positive ground, although losing its bullish potential. In the 4-hour chart, the pair holds above its 20 SMA, which maintains a mild-bullish slope, although below firmly bearish 100 and 200 SMA. Technical indicators, in the meantime, ease within positive levels, holding for now above their midlines.

Support levels: 0.5895 0.5850 0.5810  

Resistance levels: 0.5975 0.6000 0.6045

GOLD

Gold tried to keep its momentum on Wednesday but failed to surpass 1.650$ zones and retraced back after the rally seen on Tuesday which was the biggest intraday incline since 9/11. However, all the market situation seems in favour of Gold as the FED and other major central banks are pouring liquidity to the markets to fight with the outcome of the coronavirus pandemic. Apart from the central banks, governments are also announcing stimulus programmes to support struggling economies. As a result of FED’s moves, the USD index DXY retraced back to sub-101.00 levels after hitting 103.00 zones which also supported the move up seen in Gold.   

After rallying for three consecutive days, Gold faced a technical correction on Wednesday.  If Gold stays over 1.600$ level decisively, 1.615$ (April 2012-March 2013 support/resistance line) and 1.650$ can be followed as resistances. Below the 1.557$ (2019 peak), 1.530$ (%76.40 1.557$-1.445$) and 1.514$ (%61.80 1.557$-1.445$) levels can be followed as support levels.      

Support Levels: 1.557$ 1.530$ 1.514$

Resistance Levels: 1.615$ 1.650$ 1.700$


SILVER

The precious metals are finally benefitting the QE moves from the central banks and trying to regain the lost ground they had last week with the desperate need of cash. As a template, the markets experienced the same QE moves back in 2009 after the 2008 economic crisis and during that period, the precious metals rallied in high liquidity environments. Therefore, retracements might be seen as a buying opportunity in both Gold and Silver in the mid-term.

From the technical point of view, below the 13.00$ level, next targets downside can be followed at 12.00$ and 11.63$ (2020 low). Above the 13.00$ level, the resistances can be followed at 14.29$ (2019 dip), 15.00$ and 15.55$ levels. 

Support Levels: 13.00$ 12.00$ 11.63$

Resistance Levels: 14.29$ 15.00$ 15.55$

CRUDE WTI

After experiencing the biggest sell-off in the last weeks in its history, WTI is trying to balance itself close to its lowest level in 2020. On the data front, the EIA’s report showed the US crude oil supplies went up by 1.623M barrels during last week, adding to the previous 1.954M barrel build. In addition, supplies at Cushing increased by 0.858 barrels. Additional data from the report showed Distillates Stocks went down by 0.679 barrels and Gasoline Inventories fell by 1.537 barrel. However, the biggest driver in the oil market is the price war between Saudi Arabia and Russia. Also, the expected global recession caused by the coronavirus pandemic is also putting pressure on the oil prices creating low-demand and oversupply conditions.    

Below the 23.00$, the supports can be seen at 22.00$ and 20.00$ (2020 dip). Over the 24.00$ the resistances can be followed at 24.75$ (2002-2003 double support) and 26.00$ (2016 dip).

Support Levels: 23.00$ 23.00$ 20.00$

Resistance Levels: 24.00$ 24.75$ 26.00$


DOW JONES

Dow Jones tried to keep its bullish move in the wake of the biggest ever announced stimulus package by the FED. However, the move up was not permanent and the index retraced back, staying on the positive territory. In the current proposal, individuals in the US earning less than $75,000 will receive $1,200 checks while children will receive $500. More than $300 billion has been set aside for small and medium companies while $500 billion has been set aside for big companies, cities, and industries.  

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 


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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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