Daily Market Report - 10th July 2020

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EURUSD

After reaching a fresh four-week high during the Asian session at 1.1370, EUR/USD came under pressure and accelerated to the downside in the New York trade, turning negative for the day. A bout of dollar demand, a retreat in Wall Street indexes made the market mood swing evident. Renewed concerns about the COVID-19 pandemic, coupled with a Supreme Court ruling granting access to a New York Prosecutor to US President Donald Trump's tax returns, cast a shadow over investors.

US data failed to boost market mood and went largely unnoticed. There were 1,314,000 initial claims for unemployment benefits in the US during the week ending July 4th, following the previous week's print of 1,413,000 (revised from 1,427,000) and slightly better than the market expectation of 1,375,000.

The EUR/USD pair retreated sharply from its daily peak of 1.1370 and slid back below the 1.1300 mark. The pullback also sent the pair back below a descending trendline coming from February 2018 highs, questioning bulls' ability to sustain the upmove. The short-term technical picture has deteriorated, with indicators falling below their mid-lines in the 4-hour chart. However, the bias remains slightly bullish in the daily chart, with 1.1400 as the next target. The EUR/USD needs to hold above the 20-day SMA at 1.1255 to keep focus on the upside, while a loss of this level could point to a deeper correction to the 1.1190-70 area.  

Support levels: 1.1255 1.1190 1.1168

Resistance levels: 1.1370 1.1400 1.1422

USDJPY

The USD/JPY made a fresh ten-day low on Thursday, but the move lacked follow-through, which left it at square one at the 107.25 area by the end of the New York session. The USD/JPY pair continues to post lower lows on a daily basis, which could be read as a bearish sign, but remains unable to close below the 20-day SMA, which has been containing downside attempts since the beginning of July. The US dollar struggled to gain any meaningful traction as markets largely ignored the US jobless claims data, which in turn left USD/JPY confined to its recent range.

The short-term technical picture for USD/JPY has turned slightly bearish, with indicators entering negative territory in the 4-hour chart. In the daily chart, the bias remains neutral as per indicators, while the price remains inside a range bounded by the 20- and the 100-day SMAs at 107.20 and 107.70, respectively. A decisive break outside this channel is needed to set a short-term direction.

Support levels: 107.10 106.80 106.60  

Resistance levels: 107.70 107.95 108.35

GBPUSD

The GBP/USD pair is holding onto gains on Thursday and is poised to post its fifth consecutive daily gain, although it has moved off from its daily peak during the American session. After reaching a fresh three-week high of 1.2669 during the European session, the pair gave up most of its gains as the dollar strengthened amid a deterioration in market sentiment. However, the British pound has remained supported by the announcement of a £30 billion stimulus package. On Wednesday, Chancellor of the Exchequer Rishi Sunak laid out a detailed program including a job retention scheme and other means of boosting the economy.

The short-term technical picture remains bullish for the GBP/USD, with indicators in positive territory in the 4-hour chart and the RSI having already corrected oversold conditions, while the 50- and 100-period SMAs have made a bullish cross. Next resistance is now seen at 1.2688, 200-day SMA and the 1.2700 psychological level. A break through the 1.2688-1.2700 area could open the door to further gains targeting 1.2813, June monthly high. On the other hand, immediate support is seen at Wednesday's lows in the 1.2510 area, followed by the 20-day SMA at 1.2480. If the pound loses the latter, it could weaken the short-term bullish structure and pave the way to the June lows.

Support levels: 1.2600 1.2510 1.2480

Resistance levels: 1.2669 1.2690 1.2730

AUDUSD

The AUD/USD hit a fresh four-week high of 0.7000 during the European session, marginally above Wednesday's top. Still, it was rejected from the psychological level and fell to the 0.6950 area before finding support. The Aussie failed to hold onto gains and turned negative for the day during the New York session as investors' sentiment took a U-turn to the downside. Stocks pulled back and oil prices slumped amid high volatility and concerns that the rise in COVID-19 cases could lead to new lockdown measures in the world's major economies.

The AUD/USD has lost upward potential and the short-term technical picture has turned mostly neutral, with indicators holding barely above their midlines and the price falling below the 20-period SMA in the 4-hour chart. However, the bullish bias persists in the daily chart. The AUD needs to break above the 0.70 level to gain bullish momentum to attempt a retest of June's highs at the 0.7065 area. On the flip side, a loss of the 0.6905-00 region – the confluence of the 20-day SMA and the psychological level – could exert some pressure in the short-term and send the price toward 0.6830.

Support levels: 0.6920 0.6900 0.6830

Resistance levels: 0.7000 0.7030 0.7065

GOLD

After the impressive move that carried Gold over 1.800$, the yellow metal managed to consolidate over important resistance level. The USD index showed a little sign of life advancing through 97.60 level and once again Wall Street decided that the coronavirus pandemic effects can be worse than thought and retreated heavily. On the other hand, the 10-year US treasury yield dropped sharply declining to 60-basis points and closing at the 3rd lowest level in history and the lowest close since mid-April.

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

After four consecutive days of incline, Silver faced a technical correction along with Gold on Thursday. On the other hand, the USD index DXY managed to pick up some pace which suppressed both Gold and Silver. It is highly expected that the demand will come back for Silver as soon as the global economic activity goes back to normal. Therefore, with the current level of Gold to Silver ratio, Silver is still giving investors an opportunity to invest for the long run.

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 had a sudden pull-back sliding to its lowest level in July on Thursday. The sudden move is escorted by the slide in Wall Street which was triggered by the coronavirus fears and ruling from the US Supreme Court regarding Trump’s financial records. The oil market is also holding steady, as they look forward to the OPEC and its allies (OPEC+) meeting on July 15, for fresh cues on its oil output cuts policy. In the meantime, the coronavirus stats and broader market sentiment will continue to entertain oil traders. In the aftermath of the events, WTI lost its hard-gained 40.00$ level.

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 had another slip on Thursday assisted by the fear of another wave of lockdown is emerging. On the other hand, a ruling from the US Supreme Court regarding Trump’s financial records created extra pressure on the risk sentiment. Weekly first-time unemployment claims fell by only 58,000 in mid-June, which was much less than consensus estimates. The smaller decline likely reflects some moderation in the pace of re-openings across the country. This week's claims data cover the survey week for the June employment report. On a 4-week basis, initial claims averaged 1.774 million, down from 3.044 million in mid-May. That is less than half the improvement from the April to May survey week. It is likely that the erratic behaviour of the market will continue since the rising number of cases is casting a shadow on the risk appetite, better than expected macro data sets are encouraging investors for a faster recovery.  

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

* 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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