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Daily Market Report
21 Jul 2020

EURUSD

Trading around the FX board was mostly choppy at the beginning of the week, amid a scarce macroeconomic calendar and mixed news related to the ongoing coronavirus crisis. The number of new contagions continues on the rise globally, fueling fears of a steeper economic downturn still ahead.  However, news showed that the Oxford/ AstraZeneca coronavirus vaccine had produced a strong immune response in a large, early-stage human trial, introducing some optimism in a dull market. The EUR/USD pair extended its latest advance to 1.1467, it’s second-best high for the year, now trading near the level as a new day begins.

Meanwhile, EU leaders continue to discuss the recovery fund. Talks extended throughout the weekend after EU summit chairman, Charles Michel, said the fund could contain 390 billion euros in grants, which somehow, seems to have convinced hardliners.

As said, the macroeconomic calendar has little to offer, although European data missed the market’s expectations. Germany published the June Producer Price Index, which was down by 1.8% when compared to a year earlier, missing the market’s expectations. The EU released the May Current Account, which posted a seasonally adjusted surplus of €7.95 B, well below expected. This Tuesday, the EU won’t publish relevant data, while the US will just unveil the June Chicago Fed National Activity Index, previously at 2.61.

The EUR/USD pair holds on to modest intraday gains, having met buyers around 1.1400 on an intraday slide. Technical readings in the 4-hour chart indicate that bulls remain in control, as the dip below the 20 SMA was quickly reverted, although the moving average is losing bullish strength. Technical indicators, in the meantime, have lost their bullish strength but remain within positive levels. The pair tested the critical 1.1460 price zone, the area to beat to see the pair accelerating north towards fresh yearly highs.

Support levels: 1.1405 1.1370 1.1340  

Resistance levels: 1.1460 1.1495 1.1540

USDJPY

The USD/JPY pair advanced within range in this first trading day of the week, peaking at 107.54 to finally settle around 107.30. Equities traded mixed, unable to find a clear direction, as investors were keeping an eye on coronavirus developments, but also stayed cautious ahead of big companies reporting earnings this week. Modest Wall Street gains are keeping the pair afloat at the end of the day.

Japan published the June Trade Balance Total, which improved from ¥-833.4 B in May to ¥-268.8 B, missing the market’s expectation of ¥-35.8 B. Exports in the same period plunged 26.2% while imports were down by 14.4%. Also, the BOJ published the Minutes of its latest meeting. Policymakers have taken a cautious approach to adding more stimulus amid deflation risk, but as it happens worldwide, they showed concerns about the long-term effects of the pandemic on the economy. Early Tuesday, Japan will publish June National CPI data, with the core reading foreseen at -0.1% YoY from -0.2% previously.

The USD/JPY pair continues to trade neutral. The 4-hour chart shows that the pair is between directionless moving averages, while technical indicators hold above their midlines, but without clear directional strength. Bulls may become more courageous on a break above the mentioned daily high, while a short-term slide is expected on a break below 106.95, the immediate support.

 Support levels: 106.95 106.60 106.20  

Resistance levels: 107.55 107.90 108.25

GBPUSD

The GBP/USD pair surged to 1.2665, as speculative interest kept selling the greenback on the back of a continuous increase in US coronavirus cases. The Pound retained its gains after comments from BOE’s Haldane, who said that the UK’s recovery is still looking V-shaped, and the economy has clawed back about half the output it lost in March and April. He also said that policymakers would consider negative rates “if there was a further negative shock to the economy,” but the market opted to look beyond this last.

 The UK has a light macroeconomic calendar these days. On Tuesday, the kingdom will publish June Public Sector Net Borrowing, foreseen at £34.3 B from £54.5 B previously.

The GBP/USD pair is trading near the 1.2660 price zone, where it has met sellers a couple of times since July started. The short-term picture is neutral-to-bullish according to the 4-hour chart, as the pair is trading well above directionless moving averages. Technical indicators, in the meantime, have lost directional strength, but hold at daily highs well into positive territory. The pair needs to surpass the 1.2670 level to be able to extend its gains during the upcoming sessions.

Support levels: 1.2610 1.2565 1.2520

Resistance levels: 1.2670 1.2710 1.2750 

AUDUSD

The AUD/USD pair is battling to extend gains beyond the 0.7000 level, trading a few pips above it. The pair advanced within range as the greenback remained out of the market’s favor, while higher commodities prices provided additional support to the Aussie. Nevertheless, market players started the week on a cautious note amid mixed coronavirus-related headlines and ahead of earnings reports. Early Tuesday, the RBA will release the Minutes of its latest meeting, later followed by a speech from Governor Lowe, who will discuss COVID 19, the Labour Market, and Public-sector Balance Sheets.

The AUD/USD pair is pressuring daily highs but still below the critical 0.7060 price zone, the level to surpass to confirm a new leg north. The short-term picture keeps favoring the upside, as, in the 4-hour chart, the pair continues to develop above all of its moving averages. Technical indicators, in the meantime, head north with moderate strength. The chances of a bullish extension would decrease on a break below 0.6975, the immediate support.

Support levels: 0.6975 0.6930 0.6895

Resistance levels: 0.7025 0.7060 0.7100

GOLD

On the first day of the trading week, Gold extended its move-up and tested fresh highs since September 2011 at 1.820$. The USD index DXY is keeping its down mood by testing sub-96.00 levels while the 10-year yields hover around %0.63 still. While the Congress in the US is working on a new stimulus package, it is highly awaited that the union will accept a deal to help pandemic hit economies. On the other hand, the bullish move was seen in Gold was intact despite the decline seen in long positions on the hedge fund side due to latest COT-commitment of traders data. Despite the move up, also, Wall Street printed gains on Monday reflecting the mixed outlook on the market.

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$  


Gold

SILVER

Silver is keeping its decisive move up after breaking the important 17.60$ resistance. The white metal tested its highest level since September 2016 with 19.90$ but failed to test the physiological level at 20.00$. Although Gold also advanced, silver lately outperformed Gold and managed to correct Gold to the Silver ratio which hit a record level back in March. As Gold to Silver ratio is expected to be around 60 in the coming years, Silver still giving an opportunity to buy for the long run. Also, as the normalisation continues in global industrial activity, the physical demand for Silver continues to escalate.

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$

silver

 

 

CRUDE WTI

WTI is keeping its wait and see mode at the 40.00$ zone as the black gold failed to break the resistance since last June. The market sentiment on Monday was mixed while positive news circulated regarding the vaccine trials, also safe-havens as Gold found demand with the support of the decline seen in USD and other risk events. On the other hand, the Egyptian Parliament authorising its military to intervene in Libya might cause a risk event for oil in the coming weeks. 

If WTI manages to hold over 40.56$ (65.62$-0.00$ %61.80) level, the targets upside can be followed at 41.00$, 46.57$ (March decline start) and 50.00$ levels. Below the 40.00$, the supports can be followed at 39.00$ and 32.81$ (65.62$-0.00$ %50) levels.

Support Levels: 40.00$ 39.00$ 32.81$ 

Resistance Levels: 41.00$ 46.57$ 50.00$


oil

DOW JONES

While Nasdaq rallied on Monday testing its all-time highs, the advance seen in Dow Jones was capped as the industrial stocks retreated. While the number of cases continues to incline in the US, positive news circulating about possible success in vaccine tests from AstraZeneca and Pfizer&BioNTech lifted the market mood. On the other hand, the US Congress is working on a new relief package as the current jobless benefits will end in two weeks. 

Technically speaking, 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 


DowJones

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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