Daily Market Report - 25th Aug 2020

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EURUSD

The EUR/USD pair peaked at 1.1849 on Monday, underpinned by a ruling good mood. The positive sentiment prevailed throughout the day, with US indexes soaring to flirt with record highs and US Treasury yields ticking higher. Demand for the greenback resumed in the American session, with the EUR/USD pair returning to sub-1.1800 level, where it stands ahead of Tuesday opening.

The optimistic stance was triggered by weekend news indicating that the US FDA approved the use of convalescent plasma to treaT severe coronavirus cases, an experimental therapy that other countries are already using. The macroeconomic calendar was scarce, as the only figure out was the US Chicago Fed National Activity Index for July, which came in at 1.18, worse than the expected 2.73 and below the previous 5.33.

This Tuesday, Germany will publish the second estimate of its Q2 GDP, foreseen unchanged at -10.1%, and the August Business Climate, expected at 92 from 90.5 in the previous month. The US will publish July New Home Sales and the CB Consumer Confidence, seen bouncing from 92.6 to 93.2.

The latest advance of EUR/USD fell short of reverting the bearish tone of the pair, according to intraday technical readings. The 4-hour chart shows that the pair met sellers around a bearish 20 SMA, also settling below a flat 100 SMA. Technical indicators, in the meantime, recovered from near oversold readings but failed to regain positive ground, now stable within negative levels. The risk is skewed to the downside, with further declines expected on a break below the 1.1760/70 support area.

Support levels: 1.1760 1.1710 1.1665

Resistance levels: 1.1825 1.1860 1.1915  

USDJPY

The USD/JPY pair spent the first day of the week trading inside Friday’s range, ending the day with modest gains ahead of the 106.00 level. The pair seesawed between gains and losses which were led by the dollar’s demand. Equities soared, underpinning the pair, although limited action around government bond yields kept the pair within familiar levels. US Treasury yields ticked modestly higher, with the yield on the benchmark 10-year Treasury note spending most of the day at 0.64%. Japan didn’t publish relevant macroeconomic data at the beginning of the week, and its calendar will remain empty this Tuesday.

The USD/JPY pair is offering a neutral stance as the day comes to an end. In the 4-hour chart, the pair has spent most of the day between its 20 and 100 SMA, both maintaining modest bullish slopes. Technical indicators, in the meantime, remain directionless around their midlines. An immediate support area comes around 105.50, with a steeper decline expected once below it. Bulls could take their chances on a break above 106.35.

Support levels: 105.50 105.05 104.60 

Resistance levels: 105.90 106.35 106.70

GBPUSD

The GBP/USD pair surged to a daily high of 1.3146 during the European session, falling afterwards to 1.3050, flirting with its previous weekly low. The pair moved with dollar’s flows, as the UK didn’t release relevant macroeconomic data, nor there were fresh news on the Brexit front. However, the absence of progress in Brexit talks last week weighed on the Pound. The UK will publish this Wednesday the August CBI Distributive Trades Survey on realized sales, seen up 8% after adding 4% in the previous month.

The GBP/USD pair is ending the day in a relevant support area, somehow suggesting a bearish extension for this Tuesday. The 4-hour chart shows that the pair retreated after testing a bearish 20 SMA, while technical indicators have turned flat within negative levels, after a failed attempt to retake positive ground. From the current level, the pair has an immediate support level at 1.3025, with a stronger one at 1.2980.

Support levels: 1.3025 1.2980 1.2940

Resistance levels: 1.3100 1.3150 1.3195

AUDUSD

The AUD/USD pair remained unchanged for a third consecutive day, ending this Monday in the 0.7160 price zone. At the beginning of the day, the pair reached a daily high of 0.7203 on the back of risk-appetite, underpinned by a rally in equities. The greenback, however, resumed its advance during US trading hours, despite US indexes followed the lead of its overseas counterparts and reached record highs. The Australian macroeconomic calendar has been empty so far this week and will remain so until Wednesday when the country will publish Q2 Construction Work Done, seen at -5.8% from -1% in the first quarter of the year.

The AUD/USD pair retains its neutral-to-bearish stance, despite holding within familiar levels. The 4-hour chart shows that it tried to surpass its 20 and 100 SMA, but settled below them, both converging around 0.7180. In the mentioned chart, the Momentum indicator remains flat around its midline, while the RSI indicator heads lower within negative levels. A steeper decline is to be expected on a break below 0.7135, the immediate support level.

Support levels: 0.7135 0.7090 0.7050

Resistance levels: 0.7200 0.7245 0.7280 

SILVER

Silver continued to stay under pressure as the USD index DXY advanced on Monday. Precious metals lost their charm with the latest positive momentum seen in USD and Silver failed to sustain its move over 27.00$. The long-term daily Gold to Silver average ratio stands at 65.00 level. On the other hand, after the peak in March, the ratio retraced to 72.00 level and found balance. Therefore, in case of a new precious metal bull-run, Silver has more room to advance.     

If Silver manages to stay over 27.00$, next targets upside might be followed at 29.28$ (March 2013 resistance) and 30.00$ levels. Below the 27.00$ level, the supports might be followed at 25.00$, 24.00$ and 23.38$ levels.

Support Levels: 25.00$ 24.00$ 23.38$

Resistance Levels: 27.00$ 29.28$ 30.00$

CRUDE WTI

WTI is keeping its stable move over the 42.00$ waiting for an extra catalyst to move up. As the US Gulf Coast was under hurricane threat, producers by Sunday had shut more than 1 million barrels per day of Gulf Coast offshore oil production. Also, the spread of the pandemic is far from being under control on a global scale and the situation is weighing on the energy prices as fears of a decline in demand dominate the markets.  

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 started the week with a bullish gap as both Nasdaq and S&P re-set their all-time highs. The Federal Drug Administration (FDA) approved emergency use of antibody-rich blood plasma on COVID-19 patients and the Trump administration is considering fast-tracking an experimental COVID-19 vaccine developed by AstraZeneca Plc and Oxford University for use in the United States before the election. Positive news regarding the vaccine lifted the mood in the markets on Monday. Also, Apple, Inc gained another 1.8% premarket and was on track to open above $500 per share for the first time. The iPhone maker became the first public U.S. company to cross $2 trillion in market value last week. On the other hand, there is still no solid development regarding the second stimulus bill in the US.     

From the technical point of view, over the physiological 28.000 level, 28.400 can be followed as next resistance while below 27.770 level the supports can be seen at 27.400, 27.000 and 26.757 (24.680-27.400 %23.60) levels.

Support Levels: 27.700 27.400 27.000

Resistance Levels: 28.400 29.000 29.500

GOLD

Gold prices continue to slip as the USD index DXY gains traction along with 10-year yields. DXY advanced through the 93.30 level while the 10-year yield inches to %0.649. As the coronavirus vaccine news continues to emerge more and more, the risk appetite gathers momentum weighing on precious metals. On the other hand, Wall Street continues its rally pushing the indexes higher on Monday. On the other hand, hedge funds reduced short positions in futures and options according to the latest Commitment of Traders report according to the CFTC and also speculators ended their six-week run in the euro futures pushing the USD higher.

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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