Daily Market Report - 21th Aug 2020

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EURUSD

The dollar pared its post-FOMC statement advance and gave up some of its recent gains, coming under selling pressure in US trading hours. EUR/USD fell to 1.1801, weighed by the poor performance of Asian and European equities, which closed well in the red. US indexes, however, got to bounce and post modest intraday gains, despite dismal US data. The country reported the Philadelphia Fed Manufacturing Survey, which resulted in 17.2 in August, missing expectations of 21. Initial Jobless Claims in the week ended August 14 surged to 1106K worse than the 925K expected.

Speculative interest maintained a cautious approach amid mounting uncertainty over the economic future, as coronavirus cases are on the rise in Europe and some regions of the US. This Friday, Markit will publish the preliminary estimates of its August PMIs for both economies, generally seen holding in expansion territory. The numbers, which usually have a large impact on currencies, could be overshadowed by the mentioned concerns.

The EUR/USD pair trades near a daily high of 1.1868 by the end of the US session, with the bullish potential limited despite the intraday advance. In the 4-hour chart, the pair has been struggling to remain above a flat 100 SMA and remained below an also directionless 20 SMA. Technical indicators, in the meantime, remain within negative levels, indicating increased selling interest. The lower low for the week skews the risk to the downside. The pair survived the first test of the 1.1800 level but would like it pierce it on another test of it.

Support levels: 1.1810 1.1770 1.1725

Resistance levels: 1.1860 1.1915 1.1960  

USDJPY

The USD/JPY pair peaked at 106.21 but lost its impulse as demand for the greenback receded, ending the day with modest loses in the 105.90 price zone. The pair fell alongside US Treasury yields after the US reported an advance in weekly unemployment claims, which are back above 1 million. The yield on the 10-year Treasury note fell to a fresh weekly low of 0.64%, where it stands ahead of the Asian opening.

During the upcoming Asian session, Japan will publish July National inflation. The annual CPI ex-fresh food is foreseen at 0.1%, improving just modestly from the previous flat reading. Also, the country will unveil the August preliminary Jibun Bank Manufacturing PMI, previously at 45.2.

The USD/JPY pair remains incapable of sustaining gains beyond the 106.00 level and hovering around a Fibonacci level. The 4-hour chart shows that it is trading around a directionless 100 SMA while above a still bearish 20 SMA, a sign of limited buying interest. Technical indicators, in the meantime, remain within positive levels, although with uneven strength. The bullish case would be firmer on a recovery above 106.35, the next Fibonacci resistance.

Support levels: 105.60 105.25 104.85 

Resistance levels: 106.35 106.70 107.10

GBPUSD

The GBP/USD pair spent most of the day depressed around 1.3100, falling at the beginning of the day to 1.3064, its lowest for this week. The pair, however, recovered sharply by London fix, surpassing the 1.3200 figure. The UK didn’t publish macroeconomic data that could back the advance, while Brexit talks remain stalemate, with just seven weeks left to reach a post-Brexit deal. On Wednesday, talks froze after the EU rejected a UK request to grant British truckers wide-ranging access to Europe. The latest news indicated that EU negotiators also denied a UK query for a migration pact that would allow the government to return asylum seekers to other EU countries.

Early Friday, the UK will publish August GFK Consumer Confidence, foreseen at -25 from -27 in the previous month. The kingdom will also publish July Retail Sales, seen flat after a 1.6% decline in the previous month, and up yearly basis 1.5%. Later in the day, Markit will publish the preliminary August Manufacturing PMI, expected at 53.8, and the Services PMI foreseen at 57. Finally, the country will offer the CBI Industrial Trends Survey on Orders for August, seen at -35% from -46%.

The GBP/USD pair is trading a few pips above the 1.3200 level, but its bullish potential seems limited at the time being. The 4-hour chart shows that it is back above a mildly bullish 20 SMA after bouncing around the 100 SMA, while technical indicators have lost their upward strength, easing within neutral readings. Still, the pair has room to retest the year high at 1.3266, particularly if buyers continue to defend the 1.3100 threshold.

Support levels: 1.3150 1.3110 1.3070 

Resistance levels: 1.3220 1.3265 1.3300

AUDUSD

The AUD/USD pair got to recover some ground by the end of the day, trimming early losses to settle around 0.7190. The recovery was the result of decreasing dollar’s demand and a late rally in Wall Street, which managed to post modest intraday gains. Gold prices also provided positive clues for Aussie, as the bright metal also got to regain some ground. Australia didn’t publish relevant data but will release the preliminary estimates of the August Commonwealth Bank Services PMI early on Friday.

The AUD/USD pair retains its bearish bias in the short-term, but worth noting it stands not far below its yearly high. The 4-hour chart shows that the 20 SMA remains directionless above the current level, while technical indicators hold within negative levels, with neutral-to-bearish slopes. The pair would need to advance beyond 0.7245 to gain enough bullish traction to move towards 0.7300 and beyond before the week comes to an end.

Support levels: 0.7170 0.7135 0.7090

Resistance levels: 0.7245 0.7280 0.7325

SILVER

The decline in the USD index DXY once again supported the move-up in Gold and Silver on Thursday. In the aftermath of FOMC, FED’s depressive tone on the recovery of the economy created a sell-off both for precious metals and equity markets on Wednesday. However, the move did not sustain for a long time and both Gold and Silver rebounded. After hitting its highest level since 2013, Silver is in a consolidation zone around 27.00$ level waiting for an extra catalyst to extend its bull-run.  

If Silver manages to stay over 27.00$, next targets upside might be followed at 29.28$ (March 2013 resistance), 30.00$ and 32.00$ levels. Below the 27.00$ level, the supports might be followed at 25.00$ and 24.00$ levels.

Support Levels: 27.00$ 25.00$ 24.00$

Resistance Levels: 29.28$ 30.00$ 32.00$

CRUDE WTI

WTI is keeping its indecisive move around 42.00$ level. Due to a Reuters report, OPEC+ overproduction in the May-July period was 2.31 million barrels per day (BPD). Additionally, the document further revealed that OPEC+ in an alternative scenario sees global oil demand falling by 11.2 million BPD in 2020. On the other hand, China’s Commerce Ministry spokesman Gao Feng said that China and the US have agreed to go ahead with phase one trade review "in the coming days." which supported the oil prices. Earlier in the week, the US Energy Information Administration (EIA) announced that crude oil inventories in the US declined by 1.6 million barrels in the week ending August 14th.    

If WTI manages to hold over 42.00$, next targets upside can be followed at 44.00$ (February 2020 low), 48.64$ (March 2020 high) and 50.00$. Below the 42.00$ level, supports can be followed at 41.00$ and 40.00$ consolidation zone.

Support Levels: 42.00$ 41.00$ 40.00$

Resistance Levels: 44.00$ 48.64$ 50.00$

DOW JONES

Dow Jones tried to erase post FOMC losses on Thursday despite the worse than expected macro-data set in the US. The Philadelphia Fed Manufacturing Survey, resulted in 17.2 in August, missing expectations of 21 while the Initial Jobless Claims in the week ended August 14 surged to 1106K worse than the 925K expected exceeding 1 million. On the other hand, the uncertainty about the stimulus package is still pressuring the markets. White House adviser, Larry Kudlow, says in the next week or two fresh federal aid should reach unemployed Americans. Also, in a CNBC interview, he says that the Trump administration is willing to talk about coronavirus relief with democrats. At this point eh liquidity rally is pushing Wall Street despite all the risk events.  

If Dow Jones keeps its stance over 27.000 level decisively, 27.583 (June 2020 high), 28.000 and 28.402 levels can be followed as resistances. Below the 27.000 level, the supports can be followed at 26.000, 25.210 (29.568-18.158 %61.80) and 24.690 (2020 April-May resistance) levels.     

Support Levels: 26.000 25.210 24.690

Resistance Levels: 27.583 28.000 28.402

GOLDLDLDLDL

The equity markets had a sharp reversal on Thursday and the USD index DXY extended its decline to sub-93.00 levels with the help of worse than expected US macro data set pushed Gold higher. Also, with the improved risk sentiment, the 10-year US yields retreated to %0.64. Apart from the current monetary conditions being in favour of Gold, also, the uncertainty surrounding the next round of US fiscal stimulus and the gloomy outlook on the recovery of the US economy supporting the yellow metal as a normal market reaction. The off-beat move in the market is the bull run of equity markets despite the current risk events caused by extreme liquidity.   

As long as Gold stays over 1.950$, the targets upside can be followed at 1.980$ (previous all-time high), 2.000$ and 2.040$ levels. Below the 1.950$ the supports can be followed at 1.920$, 1.900$ and 1.825$ (2011 August close) levels.

Support Levels: 1.920$ 1.900$ 1.825$

Resistance Levels: 1.980$ 2.000$ 2.040$

MACROECONOMIC EVENTS

* 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.

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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