Daily Market Report - 15th July 2020

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EURUSD

The EUR/USD pair extended its advance towards 1.1406, its highest since last June when the pair reached a multi-month high of 1.1422. Currencies continued to follow the lead of equities, although this time, stocks’ behavior had not only depended on sentiment. Indeed, global indexes started the day in the backfoot, weighed by coronavirus-related concerns after California announced a lockdown to contain the spread of COVID-19. However, stocks markets later recovery on the back of solid earnings reports from big banks such as Citigroup and JP Morgan. There’s a trick, as banks’ revenues are directly linked to Fed’s massive stimulus measures meant to prop up credit markets. 

Macroeconomic data released this Tuesday included the July German ZEW Survey, which showed that Economic Sentiment in the country eased to 59.3 in July, below the previous 63.4 and the expected 60. For the EU, Economic Sentiment improved from 58.6 to 59.6 but missed the market’s expectation of 78.1. Germany also published June inflation, which met the market’s expectations printing at 0.9% YoY. As for the US, the country unveiled June inflation, which was up in the month by 0.2%. When compared to a year earlier, CPI was up by 0.6%, while the core annual reading came in at 1.2%, better than the 1.1% expected.

The macroeconomic calendar for these two economies will be quite scarce this Wednesday, with nothing scheduled in the EU and the US reporting June Industrial Production and Capacity Utilization.

The EUR/USD pair is trading just below the 1.1400 level as the day comes to an end, holding on to intraday gains despite partially losing its positive momentum. The 4-hour chart shows that technical indicators decelerated their advances after reaching overbought levels, but hold nearby. The pair, in the meantime, develops well above all of its moving averages, which finally turned north. The pair is ready to challenge June high at 1.1422, with a break above it exposing the 1.1460/70 price zone, a long-term strong static resistance area.

Support levels: 1.1370 1.1320 1.1270   

Resistance levels: 1.1425 1.1460 1.1500

USDJPY

The USD/JPY pair is ending Tuesday with modest losses in the 107.20 price zone, retreating from an intraday high of 107.43 achieved during London trading hours. The greenback enjoyed some temporal demand at the beginning of the day amid the poor performance of global equities, although a bounce in these lasts during US trading hours pushed the pair away from intraday highs. Japanese data also weighed on the local currency, as the country’s May industrial production contracted by 8.9% when compared to April, and fell 26.3% yearly basis. Capacity Utilization in the same month was down by 11.6%.

The Bank of Japan is having a monetary policy meeting this Wednesday, but policymakers are widely anticipated to maintain a wait-and-see stance. Further easing seems unlikely after the central bank approved a stimulus package of 117 trillion yen. The interest rate is expected unchanged at -0.1%, although revisions to growth and inflation forecasts are likely.

The USD/JPY pair retains its neutral stance in the short term, trading within directionless moving averages in the 4-hour chart. Technical indicators in the mentioned time-frame have lost directional strength, turning flat just above their mid-lines. The pair has multiple intraday highs from these last few days in the 107.70 price zone that need to be cleared to see it gather additional momentum. Below 106.95, on the other hand, the pair will likely spend Wednesday in the red.

Support levels: 106.95 106.60 106.20

Resistance levels: 107.40 107.75 108.10 

GBPUSD

The British Pound was once again the weakest dollar’s rival. GBP/USD traded as low as 1.2479, a one-week low, on the back of UK GDP, which was up by 1.8% MoM in May, below the 5% expected. The number suggests that the economic comeback will be long and painful. The NIESR GDP estimate for the three months to June came in at -21.2%, worse than anticipated, and after printing at -19.1% in the previous month.

Even further, Chancellor of the Exchequer, Rishi Sunak, said: “Today’s figures underline the scale of the challenge we face,” focusing then on the need to protect, support, and create jobs. The country also published its Total Trade Balance, which posted a surplus of £4.3 B in May, after printing at £2.3 B in April, and Industrial Production for the same month, which was up by 6.0% MoM after falling by 20.2% in April. The pair recovered from the mentioned low on the back of dollar’s broad weakness during US trading hours, unable, however, to turn positive for the day. The UK will publish June inflation figures this Wednesday.

The GBP/USD pair is offering a neutral-to-bearish stance, with the downside limited by the dollar’s weakness. In the 4-hour chart, the pair bounced from a mildly bullish 100 SMA but remains below a bearish 20 SMA. Technical indicators, in the meantime, lack directional strength within negative levels. Should the pair resume its decline below 1.2520, the most likely scenario is an approach to the 1.2400 price zone.

Support levels: 1.2520 1.2470 1.2420

Resistance levels: 1.2585 1.2635 1.2680 

AUDUSD

The AUD/USD pair recovered from an intraday low of 0.6920 to close the day a couple of pips below a daily high of 0.6977. The pair held within familiar levels, with intraday movements determined by equities strength or weakness. Market players ignored upbeat Australian data released at the beginning of the day, as the NAB’s Business Confidence Index recovered to 1 in June against the -87 expected. The NAB’s Business Conditions for the same month printed at -7, much better than the -39 expected. Also, China unveiled its June Trade Balance, which posted a surplus of $46.42 B, below the expected $58.6B, although exports and imports improved by more than anticipated.

This Wednesday, Australia will publish HIA New Home Sales for May, previously at -4.2% and the July Westpac Consumer Confidence, which came in at 6.3% in June.

The AUD/USD pair maintains it’s neutral short-term stance, still unable to advance beyond the 0.7000 level but with the downside limited. In the 4-hour chart, the pair settled above all of its moving averages, which anyway lack directional strength. Technical indicators, in the meantime, remain directionless around their midlines.

Support levels: 0.6930 0.6895 0.6850  

Resistance levels: 0.6995 0.7020 0.7060

GOLD

Gold had a sharp reversal on Tuesday trading mostly supported by the decline in the USD index DXY. Upbeat second-quarter earnings from large US banks and surging energy shares provided a boost to equity markets and weighed on USD. Before the US session open, Gold retreated all the way to 1.790$ before lifting to 1.810$. On the other hand, markets are experiencing a unique risk sentiment at the moment. While the number of new coronavirus cases is spiking especially in the US, also the tensions between the US and China are escalating. However, markets are buying the optimism of a fast recovery and better than expected macro data set with strong earnings. While the liquidity is extreme at this period, there is enough funding needed for both risk assets and safe-havens. 

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

Silver kept its advance through 2019 and four years high with three consecutive days of incline. The move mostly supported by the decline in the USD and also better than expected production activity data sets especially from China are boosting the sentiment for Silver. On the other hand, the Gold to Silver ratio keeps finding a balance. At this point, if Gold keeps its stance around 1.800$ and the ratio retreats current four months of low at 93.00, Silver can test 21.50$.  

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$

DOW JONES

Dow Jones had a robust incline on Tuesday after yesterday’s volatile session. On Monday, Wall Street gave away its gains right before the market close with the news about California re-imposing ban on indoor activities due to spike in coronavirus cases. However, today the traders seem to get over the pandemic fears and cheer the better than expected earnings from PepsiCo and Pfizer. The USD index DXY is keeping its foot down while cautious traders also increasing their positions in Gold too. FED’s Brainard today signalled that they will perform bond purchase with a “big scale” as congress at the moment being slow to implement extra countermeasures to support the economy. The news created an extra boost to risk sentiment while today FED’s Beige Book will be followed by the traders.  

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

WTI E2

The 40.56$ (65.62$-0.00$ %61.80) barrier is still intact for WTI as the black gold failed to break this level. On the other hand, as the global demand is picking up pace with the normalisation of the economies, expectations that the OPEC and its allies (OPEC+) will ease the output cut policy when it meets this Wednesday. Meanwhile, a Bloomberg report added that the OPEC+ is considering raising output by 2 million barrels per day (BPD). On the contrary side, the number of new cases in the USA is forcing some states to re-impose lockdown measures like in California. Therefore, there is a risk of decline in the demand is intact and suppressing the positive look on WTI.

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$

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.

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