Daily Market Report - 27th Nov 2020

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EURUSD

The EUR/USD pair trades around 1.1910 after hitting a fresh 2-month high of 1.1940 during London trading hours. Rising Asian equities provided support to the shared currency, although tepid German data and the soft tone of European indexes pushed it down from the mentioned high. Germany published the GFK Consumer Confidence Survey, which contracted to -6.7 in December from -3.2 in the previous month, also missing the market’s expectations.

The ECB published the Minutes of its latest meeting, and the document showed that policymakers believe that the pandemic might have longer-lasting effects both on the demand side and on the supply side. Inflation is expected to remain negative for longer, while employment could contract further. The statement is no surprise as the central bank has begun to pave the way towards additional easing next December.

US markets were closed due to the Thanksgiving Holiday, and while Friday is not an official holiday, thinned trading is expected to extend into the weekend. The EU will publish the November Economic Sentiment Indicator, foreseen at 86.5 from 90.9.

The EUR/USD pair has bottomed for the day at 1.1884, where the 20 SMA provides dynamic support in the 4-hour chart. The 100 SMA keeps advancing below the shorter one and above the 200 SMA. Technical indicators remain within positive levels, lacking clear directional strength. The risk remains skewed to the upside, although the pair needs now to advance beyond 1.1960 to accelerate its advance.

Support levels: 1.1880 1.1840 1.1790

Resistance levels: 1.1960 1.2010 1.2050

USDJPY

The USD/JPY pair trades in the 104.20 price zone, consolidating losses after giving up some ground at the beginning of the day, amid the broad dollar’s weakness. A sour market mood throughout the European session kept the pair under pressure, while a US holiday exacerbated range trading through the second part of the day.

Japan published the final reading of the September Leading Economic Index, which resulted at 92.5, below the 92.9 expected. The Coincident Index for the same period improved to 81.1. The US won’t release macroeconomic data for the rest of the week. Early on Friday, Japan will publish November Tokyo inflation, foreseen at -0.6% YoY contracting further from the previous -0.3%.

The USD/JPY pair remains lifeless at daily lows, gaining bearish potential in the near-term. The 4-hour chart shows that the pair is now below all of its moving averages, with the 20 SMA still maintaining its bullish slope. The Momentum indicator turned lower after failing to surpass its midline, while the RSI is directionless around 48. Thin market conditions may see the pair holding within familiar levels this Friday, although the risk is skewed to the downside.

Support levels: 103.95 103.50 103.15

Resistance levels: 104.65 105.00 105.40  

GBPUSD

The GBP/USD pair is down this Thursday, trading around 1.3360 ahead of the Asian opening. The pound was unable to extend its gains beyond 1.3400 against the greenback after the EU’s chief negotiator Michel Barnier threatened to pull off Brexit talks unless the UK is willing to concede on the critical issues. UK Chancellor Sunak said this Thursday that the UK should not be stretching for a Brexit deal at any cost, somehow cooling hopes for a post-Brexit trade deal.

 The UK didn’t publish macroeconomic data on Thursday and has little to offer on Friday, as it will release November Nationwide Housing Prices. Brexit-related headlines will continue to determine GBP/USD’s direction.

The GBP/USD pair is losing its bullish potential but at the same time remains far from bearish. The 4-hour chart shows that the pair is stuck around a flat 20 SMA, while the longer moving averages keep heading firmly higher well above it. The Momentum indicator bounced from its 100 line, while the RSI is flat around 52. The bearish case will firm up on a break below 1.3290, the immediate support level.

Support levels: 1.3290 1.3250 1.3205

Resistance levels: 1.3365 1.3410 1.3460  

AUDUSD

The AUD/USD pair is confined to a tight range around 0.7360 for a second consecutive day, holding on to monthly gains. The pair was extremely quiet this Thursday, getting little clues from equities´ behavior. Australia published Q3 Private Capital Expenditures, which fell to -3%, worse than the -1.5% expected. The country’s macroeconomic calendar will remain empty this Friday.

The technical picture for the AUD/USD pair remains the same, with the risk skewed to the upside. The 4-hour chart shows that the pair consolidates above a bullish 20 SMA, which keeps advancing above the larger ones. The Momentum indicator picked up after testing its midline but lacks strength enough to confirm a bullish extension. The RSI indicator consolidates around 59. Sellers remain side-lined as the dollar remains away from investors’ radar.

Support levels: 0.7330 0.7290 0.7250

Resistance levels: 0.7370 0.7415 0.7540

GOLD

After the latest meltdown seen in precious metals triggered by the vaccine news, Gold is still trying to hold its psychological level of $1,800. As the US markets were closed due to the Thanksgiving holiday, market volume was thin. The biggest event was the ECB minutes on Thursday while the minutes contained little new information regarding the ECB monetary policy stance, with further easing in the form of tweaks to the PEPP and TLTROs heavily expected in December. However, alongside Wednesday’s FOMC minutes, they did serve as a reminder that more stimulus from two of the worlds is on the way. In this case, Gold might benefit from the extra Fed stimulus in December due to its impact on the USD.      

From the technical point of view, below the $1,860 level, the supports can be followed at $1,800, $1,763 ($1,451-$2,075 61.80%) and $1,700 levels. Over the $1,860 level, the resistances can be followed at $1,900 with $1,956 ($1,451-$2,075 38.20%) and $2,000 levels.

Support Levels: $1,800 $1,763 $1,700

Resistance Levels: $1,900 $1,956 $2,000

SILVER

Silver also had a directionless trading session on Thursday in the aftermath of vaccine decline seen this week. At this point, precious metals are at the hands of monetary developments and vaccine news as the markets gear up for year-end trading. Precious metals are trapped between the vaccine news which might ease the lockdown measure boosting the economic activity and an expected decline in USD due to further stimulus programme announcements. Therefore, there might be some volatility seen in the coming months. Also, Silver might keep its stance better than the Gold due to its industrial usage.

Below the $22.90 level ($11.63-$29.86 38.20%), the supports can be followed at $20.75 ($11.63-$29.86 50.00%) and $18.42 ($11.63-$29.86 61.80%). Over the $22.90 level, the target's up can be followed at $25.21 ($11.63-$29.86 23.60%), $26.00 (August-September support), $27.00 and $28.00 levels.

Support Levels: $22.90 $20.75 $18.42

Resistance Levels: $25.21 $26.00 $27.00 

CRUDE WTI

WTI slashed a portion of its recent gains on Thursday after hitting its highest level in the last eight months. Earlier in the week, the EIA reported a drop of around 750K barrels in US crude oil supplies during last week, in line with the decrease in oil inventories reported late on Tuesday by the API. Further data from driller Baker Hughes showed US oil rig count went up by 10 during last week to 241 active oil rigs. While the vaccine news and the US election results support the black gold, the current reality about the demand is pressuring oil prices as the second wave hit the US and Europe harder than the first wave. On the other hand, possible OPEC+ delay of the planned 1.9 million barrels/day January output increase by 3 months to April will help to bring the market back to a narrow 0.9 million barrels/day deficit in Q1 from an expected surplus in December.   

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

Markets were closed in the US on Thursday due to the Thanksgiving holiday. While the majority of the macro-readings were packed on Wednesday with the FOMC minutes, the index gave away a part of its gains after hitting its all-time high over the 30,000 level. Minutes of the FOMC's November 4-5 meeting showed on Wednesday that policymakers judged immediate adjustments to the pace and composition of asset purchases were not necessary. However, policymakers further noted that circumstances could shift to warrant such adjustments. The USD index kept its limited range around the 92.00 level while futures for Dow Jones retraced slightly during the holiday trade. 

From the technical point of view, if the index stays over 29,000, 29,500 and 30,000 levels can be followed as new targets high while below the 28,400 level, 28,000 and 27,770 can be followed as supports.

Support Levels: 28,400 28,000 27,770

Resistance Levels: 29,500 30,000 30,500

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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