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Daily Market Report
13 Jul 2020

EURUSD

The EUR/USD pair finished Friday at around 1.1300, posting a modest advance for a third consecutive week. Currencies continued to trade on the heels of coronavirus-related data amid the absence of relevant macroeconomic news. The market’s sentiment was sour amid record new cases in the US, which reported roughly 70,000 new contagions in a day for three days in-a-row. The mood improved after Gilead reported that its drug, remdesivir, can reduce the risk of mortality in COVID-19 patients by 62% when compared with the standard of care. However, the company also noted that these findings need to be confirmed. Nevertheless, it was enough to push equities higher and the greenback lower.

Weighing on the American dollar, the US Bureau of Labor Statistics announced that the  Producer Price Index fell by 0.8% in the year to June, while the core reading came in at 0.1%, both well below the market’s expectations. Late on Friday, the US government announced tariffs of 25% on French imports valued at $1.3 billion in response to France’s digital services tax but would hold off on implementing them for up to 180 days. The news could have a negative impact on financial markets, mainly considering the economic calendar has nothing to offer this Monday.

The EUR/USD pair stabilized at higher levels last week, but still lacks the momentum needed to extend its gains. It met buyers at around 1.1270, a Fibonacci support level, but was unable to clear the 1.1340/50 region, quickly retreating after briefly surpassing it. The pair is neutral in the daily chart, as the 20 SMA remains flat a few pips below the mentioned Fibonacci support, while technical indicators keep hovering around their midlines. In the shorter-term, and according to the 4-hour chart, it also offers a neutral stance, struggling with a directionless 20 SMA yet above the larger ones, and as technical indicators remain stuck to neutral readings.

Support levels: 1.1270 1.1220 1.1170    

Resistance levels: 1.1345 1.1390 1.1425

USDJPY

The USD/JPY pair fell to 106.63, a two-week low by the end of the week, as risk-aversion coupled with the broad dollar’s weakness, both the result of coronavirus-related headlines. A spike to record daily highs in the US dented the market’s mood, although things seem to have stabilized over the weekend. The pair bounced from the mentioned low and settled at 106.90, as the sentiment improved ahead of the close on renewed hopes over a COVID-19 treatment with Gilead’s remdesivir.  Also, US Treasury yields recovered from multi-week lows, helping the pair to recover some ground.

On Friday, Japan published the June Producer Price Index, which fell by 1.6% YoY, better than the -1.9% expected. Monthly basis, the PPI rose 0.6% against the 0.4% expected. The country will release the May Tertiary Industry Index at the beginning of the week, previously at -6%.

The USD/JPY pair is technically bearish according to the daily chart, as it extended its slide below a bearish 20 SMA, which lost on Thursday. The Momentum indicator in the mentioned chart remains flat around its 100 line, but the RSI gains downward strength, currently around 42. In the shorter-term, and according to the 4-hour chart, the risk is skewed to the downside, as the pair is developing below all of its moving averages, while technical indicators barely corrected oversold conditions before stabilizing within negative levels.

Support levels: 106.60 106.25 105.90  

Resistance levels: 107.30 107.65 108.00

GBPUSD

The GBP/USD pair hit 1.2663 on Friday, unable to surpass its weekly high and retreating to settle at 1.2621. The rally was the result of the broad dollar’s weakness, as news coming from the UK lend no support to the Pound. Market players ignored headlines indicating no progress in Brexit talks throughout the week, with remaining “significant differences” on a number of important issues.

By the end of the week, UK PM Johnson said that he hopes to have a V-shape economic recovery, but added that the government cannot be certain. He also said that a “stricter” approach to the use of face masks in the kingdom is needed, with Johnson wearing one for the first time when in public ever since the pandemic hit the UK. At the beginning of the week, BOE’s Governor Bailed is due to participate in a panel discussion with the Federal Reserve Bank of New York and could make some comments about future monetary policies.

The GBP/USD pair is near the one-month high set at the beginning of July at 1.2669, neutral-to-bullish according to the daily chart. The pair has held for a fourth consecutive day above its 20 and 100 SMA, with sellers aligned ahead of a flat 200 SMA, this last around 1.2690. Technical indicators, in the meantime, hold within positive levels but lack directional momentum. In the 4-hour chart, a bullish 20 SMA provides dynamic support, now at 1.2595, but keeps heading north above the larger ones. Technical indicators, in the meantime, hold directionless well into positive ground, limiting the chances of a downward extension in the near-term.

Support levels: 1.2630 1.2595 1.2550

Resistance levels: 1.2685 1.2730 1.2770

AUDUSD

The Australian dollar eased for a second consecutive day against its American rival, ending the week unchanged at around 0.6950. The pair fell to 0.6923 at the beginning of the day, amid tensions between China and Australia and a dismal market mood. By the end of last week, Australia announced the suspension of its extradition treaty with Hong Kong in response to China’s decision to impose new national-security legislation, further mounting tensions between the two countries. The pair bounced from the mentioned low during the last trading session of the week, helped by the better performance of Wall Street, although unable to turn positive for the day.

Australia won’t release macroeconomic data this Monday, with the focus on the weekend coronavirus-related headlines. The state of Victoria reported 273 new cases of COVID-19 this Sunday, while the country also reported a community outbreak in New South Wales. Nevertheless, the country reported just one new death over the weekend, taking the national toll to 108.

The AUD/USD pair remains unable to take over the 0.7000 threshold. The daily chart shows that it continues to comfortably consolidate ahead of the mentioned level, retaining its neutral stance. The daily chart shows that a horizontal 20 SMA provides support around the 0.6900 level, as technical indicators ease within positive levels. In the shorter-term, and according to the 4-hour chart, the pair is also neutral, as it’s trading between directionless moving averages, as technical indicators head nowhere around their midlines.

Support levels: 0.6895 0.6850  0.6810

Resistance levels: 0.6995 0.7020 0.7060

GOLD

Gold lost its handle over an important level of 1.800$ and retraced a tick below by the end of Friday. The risk appetite was overall strong on Friday while Wall Street regained its recent losses. On the other hand, the USD index DXY stayed below the 97.00 level. While the central bank’s current policies like extreme liquidity and negative rates to fight with the effects of the coronavirus pandemic are supporting Gold prices, fears of a second wave in the coronavirus pandemic also support the demand for Gold. This week’s agenda will kick-off with the trade balance data from China on Tuesday with the consumer price index data set from the US which will be followed by the FED’s beige book on Wednesday. Also, later in the week the GDP data set from China and retail sales data set from the US will be followed on Thursday as risk drivers.

The technical correction seen on Friday pushed Gold prices a tick below 1.800$. If Gold prices will continue to stay over 1.800$ decisively, next target might be followed at 1.825$ (2011 August close), 1.900$ and 1.922$ (all-time high). Below the 1.800$ level, the supports can be followed at 1.750$(December 2012 peak) and 1.738$ (April double top).

Support Levels: 1.800$ 1.750$ 1.738$

Resistance Levels: 1.825$ 1.900$ 1.922$

SILVER

While Gold lost its momentum on Friday, Silver managed to end the day a tick over its opening level. Silver is keeping its decisive stance over 18.00$ with the positive signals supporting a V-shaped recovery in industrial production. While the Gold to Silver ratio still leaves a room for an advance against Gold. On the other hand, Silver managed to gain %33 in 2020 Q2. Therefore, with the normalisation of the economies, Silver will likely to keep its advance.

If Silver stays over the important 18.38$ decisively the next resistances can be followed at 18.70$, 19.00$ and 19.64$(September 2019 high). Below the 18.38$ level, the supports can be seen at 18.00$, 17.60$, which is the %38.20 level of 14.29$ and 16.97$ (%50.0 14.29$-19.65$).   

Support Levels: 18.38$ 18.00$ 17.60$

Resistance Levels: 18.70$ 19.00$ 19.64$


CRUDE WTI

WTI managed to recover from its decline on Thursday and stayed over 40.00$ level. Despite the recovery, the level around 40.00$ is looking fragile and WTI needs a decisive move over this level. Doubts over the global economic recovery undermine the oil demand growth outlook, exacerbating the pain in the black gold. The US oil remains on track to book about a 3% weekly loss. Meanwhile, US-China trade tensions combined with the brewing political uncertainty in the US also weighs on the higher-yielding oil. On the other hand, the International Energy Agency (IEA) raised the oil demand growth forecast for this year. Also, OPEC+ scheduled a meeting on July 15 for fresh updates on the oil output cuts policy.

A decisive move over 32.81$ (65.62$-0.00$ %50) might carry WTI to 40.56$ (65.62$-0.00$ %61.80), 50.00$ and 54.00 levels. Below the 32.81$ level, 31.00$, 27.40$ (9th of March dip) and 26.00$ levels can be targeted.

Support Levels: 31.00$ 27.40$ 26.00$

Resistance Levels: 40.56$ 50.00$ 54.00$


DOW JONES

Dow Jones almost recovered its losses made on Thursday and managed to end Friday a tick over 26.000 level. Wall Street is trying its best before the Q2 earnings season while the situation on coronavirus pandemic is far from over especially in the US as the number of new cases continues to build-up. On the other hand, FED is slowing its balance sheet growth and implying diminished policy support. This week will be important in terms of data releases in the US. The consumer price index data set from the US which will be followed by the FED’s beige book will be released on Wednesday. Also, later in the week, retail sales data set from the US will be followed on Thursday as risk drivers.

Below the 25.000 level, 24.719 (21.712-29.585 %61.80) 23.500 and 23.000 levels can be followed as support levels while a steady close over 25.667 (21.712-29.585 %50) will most likely to carry Dow Jones to 26.000, 26.577 (21.712-29.585 %38.200) and 27.000 levels.

Support Levels: 25.000 24.719 23.500 

Resistance Levels: 26.000 26.577 27.000


MACROECONOMIC EVENTS

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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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