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Daily Market Report
14 Jul 2020

EURUSD

The EUR/USD pair slowly but steadily advanced this Monday, reaching a fresh July high at 1.1374 during the American afternoon. The dollar weakened against most major rivals amid a cautious optimism across the financial world. Speculative interest continued to cheer Friday news coming from Gilead, which reported its drug remdesivir has an encouraging survival rate. Another factor pushing high-yielding assets higher is the fact that governments are trying to avoid returning to lockdowns, which could interrupt the shy economic progress seen after March´s chaotic collapse, despite the continued increase in coronavirus cases.

The macroeconomic calendar had not much to offer, although Germany published the June Wholesale Price Index, which rose 6.0% monthly basis. The German economy ministry, Peter Altmaier, said that the country is in the process of recovering and that the low point has passed, further fueling the EUR’s advance. Tuesday will be a busier day, as Germany will publish its June inflation and the July ZEW survey, while the Union will publish Industrial Production for May. The US, on the other hand, will release June CPI.

The EUR/USD pair is trading near its daily highs by the end of the US session but continues to lack bullish momentum. The 4-hour chart shows that the pair is developing above a bullish 20 SMA, this last around 1.1310 and above the larger ones. Technical indicators hold within positive levels, although without directional strength. The former 1.1340/50 resistance area now is the immediate support region. As long as the pair holds above it, there’s room for an extension towards 1.1422, the high set last June.

Support levels: 1.1350 1.1310 1.1270    

Resistance levels: 1.1390 1.1425 1.1460

USDJPY

The USD/JPY pair returned to its 107.20/30 comfort zone this Monday, helped by the better market mood. The advance, however, was limited as speculative interest was not interested in buying the greenback, instead jumping into high-yielding assets. Equities posted substantial gains across the three major sessions, and even US Treasury yields posted a modest intraday advance. News that new coronavirus cases continue to rise globally were partially offset by  headlines indicating that the US FDA approved the Fast Track designation to the joint coronavirus vaccine efforts made by German BioNTech and US pharmaceutical Pfizer.

At the beginning of the day, Japan published the May Tertiary Industry Index, which resulted in -2.1%, improving from -6% in April. This Tuesday, the country will release Industrial Production and Capacity Utilization, both for May. Meanwhile, Japan’s economy minister, Yasutoshi Nishimura, said that there’s no need to declare the state of emergency again in Tokyo.

The USD/JPY pair is technically neutral heading into the Asian session, lacking bullish potential. The 4-hour chart shows that the price is stuck around a flat 100 SMA, while a handful of pips above a still bearish 20 SMA. Technical indicators, in the meantime, have recovered towards their midlines, losing their directional strength. The pair could extend its modest advance in a risk-favorable environment, although a substantial directional movement remains out of the picture.

Support levels: 106.95 106.60 106.25  

Resistance levels: 107.65 108.00 108.40

GBPUSD

The GBP/USD pair traded as high as 1.2665 on the back of risk-appetite but was unable to hold on to gains, spending most of the last two sessions battling to retain the 1.2600 threshold, to finally plunge to the current 1.2570 price zone. Chatter on possible negative rates and the lack of progress in Brexit talks towards a trade deal with the EU weighed on Pound. Bank of England Governor Bailey was on the wires this Monday, saying that there are signs of economic recovery, but adding that there’s a long way to go. Meanwhile, UK PM Johnson said that the government got the virus under control across the country, adding the importance of wearing a face-covering in closed environments. Johnson added guidance on face marks will be out in the next few days.

 The kingdom will have a busy macroeconomic calendar this Tuesday, as it will publish several figures from last May, including the Trade Balance, Industrial Production, and the monthly GDP, this last foreseen at 5% after collapsing in April to -20.4%.

The GBP/USD pair is hovering around the 1.2600 figure, trading with a weak tone. The lack of dollar’s demand limits the downside. Nevertheless, the 4-hour chart shows that the pair has remained below a bullish 20 SMA throughout the US session, while technical indicators head lower at fresh July lows, the Momentum extending within negative levels. The bearish potential could increase on a break below 1.2565, the immediate support.

Support levels: 1.2565 1.2520 1.2470

Resistance levels: 1.2635 1.2680 1.2730

AUDUSD

The AUD/USD pair neared the 0.7000 threshold but was unable to conquer the level once again, and trimmed most of its intraday gains to settle around 0.6950. The Aussie gave up despite the broad dollar’s weakness amid Wall Street and gold prices retreating from daily highs ahead of the close. Also, China issued a travel advisory for Australia, with the ministry of foreign affairs citing racism, violence, and anti-Chinese sentiment. Meanwhile, gold prices spent the day trading between 1,800/10, holding on to gains but lacking definition.

Australia will publish this Tuesday the NAB’s Business Confidence, foreseen in June at -87 from -20 in the previous month, and the NAB’s Business Conditions for the same month, expected at 39 from -24. Also, China will publish it’s June Trade Balance, seen posting a surplus of $58.6 billion.

The AUD/USD pair has been trading above the 0.6900 level pretty much since the month started, yet has been unable to sustain gains beyond the 0.7000 mark. The short-term picture is neutral with a slightly bearish note, as, in the 4-hour chart, technical indicators turned south just below their midlines. In the same time-frame, the pair is struggling around a flat 20 SMA, but still above the larger ones. The bearish potential is conditioned to dollar’s demand, which is set to remain limited.

Support levels: 0.6930 0.6895 0.6850   

Resistance levels: 0.6995 0.7020 0.7060

GOLD

Gold tested sub-1.800$ on Monday but managed to pick up the pace and managed to find balance a tick over physiological level after testing 1.813$ as intraday high. The USD index DXY is continuing its decline around mid-96.00 level while Wall Street had a mixed look. Apart from the coronavirus pandemic problem especially in the US, the tension between the US and China keeps on escalating with salvos from the US side. White House Economic Advisor Kudlow said Trump is not in a "good mood" about China. He also went on to say the government will need to have a hard look at Chinese companies listed in the US. Something tells me there is lots more to come from this conflict. On the contrary side, China banned some US senators from entering the country. However, the markets decided to ignore both issues while Gold benefited the retracement seen in the USD.  

At this point, the cautious-bullish mood carrying both Wall Street and Gold to upper levels. The technical correction is 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$ 

XAUUSD

 

 

 

SILVER

Silver had an impressive rally on Monday outperforming Gold supported by the decline seen in the USD index DXY. The white metal tested its highest level since August 2019 taking back all the losses made in the first shock of the pandemic. The underperforming metal will likely to find extra support for a couple of reasons. The recovery seen in Chinese industrial output data will create a bigger demand for the industrial metal. Also, due to lockdown measures in Central and South America, there is a disruption in supply. Therefore, along with the normalisation in industrial demand, Silver will most likely to close the gap with Gold.

Above the 19.00$ level, next targets can be followed at 19.64$ (2019 high), 20.00$ and 21.00$ (2016 high). On the other hand, below the 19.00$ supports can be followed at 18.38$ (14.29$-19.64$ %23.60) and 17.60$ (14.29$-19.64$ %38.20).

Support Levels: 19.00$ 18.38$ 17.60$

Resistance Levels: 19.64$ 20.00$ 21.00$


CRUDE WTI

Despite the expected decline from seven major shale formations, WTI failed to capitalise the news and retraced back below 40.00$. Reuters reports that the output from seven major shale formations is expected to decline by about 56,000 barrels per day. US producers have slashed spending and curtailed new drilling as oil prices collapsed this year after the coronavirus pandemic eroded global fuel demand. On the other hand, OPEC+ is getting ready to ease the oil output cuts in its meeting as the global demand is picking up the pace. In the short run, WTI might have volatile trading sessions as the black gold is underpinned by the fears of an escalation in the number of new cases. On the contrary side, WTI might be supported by the bullish macro-data sets.   

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

Wall Street had a volatile start of the week as the indexes spent most of the day with inclines before slashing their gains right before the market close. The last-minute sell-off is triggered by the re-impose of lockdown measures in California. As California generates almost %15 of the economic activity in the US and all indoor activities are banned again as a countermeasure against escalating new coronavirus cases. Earlier in the day, Nasdaq hit a new intraday record high supported by the positive news regarding the coronavirus vaccine. At this point, with the extreme liquidity in the markets looking for a direction, FOMO-’fear of missing out action’ is driving the fresh capital to equity markets despite all the risk events such as un-controllable pandemic in the US and the escalating tensions between the US and China.

Over the 26.000 level, the resistance can be followed at 26.875 (29.568-18.158 %76.40), 27.583 (June 2020 high) and 28.000 levels. On the other hand, below the 26.000 level, targets downside can be followed at 25.210 (29.568-18.158 %61.80), 24.690 (2020 April-May resistance) and 23.863 (29.568-18.158 %50.00).

Support Levels: 26.000 25.210 24.690

Resistance Levels: 26.875 27.583 28.000


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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