Daily Market Report - 11th Nov 2020

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EURUSD

Financial markets took Tuesday to consolidate, with the greenback giving up some of the ground gained on Monday. The shared currency was among the weakest, falling against the greenback to a daily low of 1.1779 amid discouraging German data. The local ZEW Survey came in worse than anticipated, as the Economic Sentiment in the country contracted to 39 in November from 56.1 in the previous month, while the assessment of the current situation came in at -64.3, down from -59.5. For the EU, Economic Sentiment fell to 32.8.

Stocks’ markets momentum receded, and so did the dollar’s one, although the American currency holds near its weekly highs against all of its major rivals, amid prevalent optimism about a coronavirus vaccine and as US presidential election’s tensions have a lesser effect on currencies.

This Wednesday, the US celebrates a holiday, and while most markets will be opened, the country won’t release macroeconomic data. In the EU, the focus will be on the ECB, as President Christine Lagarde and other voting members will be on the wires.

The EUR/USD pair is trading around 1.1810, finishing a second consecutive day above the 38.2% retracement of its latest bullish run at 1.1800, despite short-lived intraday slides below the level. The risk is skewed to the downside in the near-term, as the 4-hour chart shows that the pair spent the day below its 20 SMA, which loses bullish strength. The Momentum indicator is heading lower within negative levels, while the RSI is flat within negative levels. A bearish continuation seems likely on a break below the mentioned weekly low.

Support levels: 1.1780 1.1740 1.1695

Resistance levels: 1.1840 1.1885 1.1920

USDJPY

The USD/JPY pair is ending Tuesday as it started, hovering around the 105.30 price zone. The pair fell at the beginning of the day to 104.81, recovering from the level during European trading hours, as the dollar corrected extreme overbought conditions before resuming its advance. Stocks maintained a positive tone in Europe and Asia, but Wall Street closed mixed, as enthusiasm faded. US Treasury yields, on the other hand, retreated just modestly from the multi-month highs achieved on Monday.

Japanese data was mixed, as the September Trade Balance printed a surplus of ¥918.4 billion, better than anticipated, although the Eco Watchers Survey on the current situation improved by less than anticipated in October, printing at 54.5 from 49.3 in the previous month. This Wednesday, the country will publish the preliminary October Machine Tool Orders, previously at -15%.

The USD/JPY pair retains its bullish stance in the short-term, and according to the 4-hour chart. In the mentioned time-frame, it continues developing above all of its moving averages, with the 20 SMA advancing but still below the larger ones. Technical indicators, in the meantime, remain near overbought readings, the Momentum advancing, and the RSI consolidating around 65. The pair needs to surpass the weekly high at 105.65 to extend its gains towards the 106.00 level, where a daily descendant trend line provides resistance.

Support levels: 105.30 104.90 104.50

Resistance levels: 105.65 106.00 106.40

GBPUSD

The GBP/USD pair surged to a fresh two-month high of 1.3277, helped by upbeat UK employment data. The ILO unemployment rate in the three months to September resulted as expected at 4.8%, while Average Earnings in the same period increased by more than anticipated. Also, the October Claimant Count Change shows a drop of 29.8K, much better than the expected 36K increase.

On the Brexit front, talks continue without fresh reports. UK PM Boris Johnson suffered a setback in the House of Lords early Tuesday, as lawmakers voted to remove a clause of the Internal Market Bill that would give ministers the power to unilaterally override parts of the exit treaty relating to Northern Ireland. This Wednesday, the UK will publish the NIESR GDP Estimate for the three months to October, foreseen at 20.1% from 15.2% previously.

From a technical point of view, the GBP/USD is neutral-to-bullish, as, despite its fresh high, the positive momentum seems limited in the near-term. The 4-hour chart shows that the pair has advanced beyond all of its moving averages, with the 20 SMA firmly above the larger ones. Technical indicators, however, are flat within positive levels, lacking directional strength.

Support levels: 1.3185 1.3140 1.2990

Resistance levels: 1.3280 1.3335 1.3380

AUDUSD

The AUD/USD pair has spent Tuesday confined to a tight 40 pips’ range near but below the 0.7300 level. At the beginning of the day, Australia published October NAB’s Business Confidence, which came in at 5, improving from -4. NAB’s Business Conditions for the same month improved to 1 from 0. However, the aussie was unable to benefit from upbeat local data, neither from the positive tone of equities. This Tuesday, the country will publish Westpac Consumer Confidence, seen in November at 3.8% from 11.9% in the previous month.

The AUD/USD pair is neutral in the short-term, although the risk remains skewed to the upside. The 4-hour chart shows that the pair is hovering around a still bullish 20 SMA, which continues to advance beyond the larger ones. Technical indicators, in the meantime, remain directionless, the Momentum around its 100 level, but the RSI at 59, indicating limited selling interest. The pair would need to advance beyond the 0.7345 resistance level to be able to extend its gains during the following sessions.

Support levels: 0.7250 0.7210 0.7170

Resistance levels: 0.7300 0.7345 0.7390

GOLD

Gold managed to erase a small position of its massive losses made on Monday with a technical correction upside. The most solid positive development regarding the coronavirus vaccine lifted the risk appetite carrying the US indexes to their all-time highs while creating a heavy selling pressure for the precious metals. The day after the price meltdown, the risk appetite was more cautious as Gold faced some technical dip-buying. The USD index slightly declined and the US 10-year yields kept its upbeat level around 0.95. Apart from the developments in the vaccine and US election results, ECB Lagarde’s speech might affect the USD today as well as Gold trading.  

Below the $1,860 level, the supports can be followed at $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: $1,860 $1,763 $1,700

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

SILVER

Silver also managed to regain some of its losses made on Monday trying to keep the $24.00 level. As Pfizer and its German partner, BioNTech announced positive news about the coronavirus vaccine, markets faced massive risk-on trading pressuring the safe havens such as precious metals. While the vaccine news pressured precious metals, Silver managed to hold better compared to Gold due to its industrial metal etiquette. Compared to pre-election levels around 80.00, Gold to Silver ratio hovers around 77.00 reflecting the better performance of the white metal.   

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 targets 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 continues to profit the positive developments about the coronavirus vaccine testing over $41.00 on Tuesday. While hopes of a vaccine sparked risk-appetite in the markets, current lockdown measures, especially in Europe, limited the move-up in oil prices. According to Rystad Energy, lockdowns in Europe could shred 1 million barrels per day of oil demand by the end of this year. As the developments about the vaccine will not be on the shelves immediately, WTI still has a risk downside and the current rally looks fragile.   

If WTI manages to hold over $40.56 ($65.62-$0.00 61.80%) level, the target's upside can be followed at $41.00, $46.57 (March decline start) and $50.00 levels. Below $40.00, the supports can be followed at $39.00 and $32.81 ($65.62-$0.00 50.00%) and $31.00 levels.

Support Levels: $39.00 $32.81 $31.00 

Resistance Levels: $41.00 $46.57 $50.00

DOW JONES

As soon as the positive developments about the coronavirus vaccine hit the markets on Monday, with the improved risk appetite, the US indexes started the day with massive bullish gaps testing their all-time highs on Monday. However, Dow Jones failed to keep its intraday gains and slid to the negative zone by the end of the session keeping its bullish gap. The index had a fairly more balanced trading session on Tuesday as the markets continue to digest the vaccine developments. On the other hand, while Dow Jones had a better performance on Tuesday, both S&P and Nasdaq fell on a daily basis with tech-shares lead. On the election side, President Trump, who has not conceded the election to Democrat Joe Biden, plans to go ahead today with legal challenges to the results of elections while Attorney General Barr authorized probes of vote irregularities. As Biden’s presidency is now confirmed, the race for the Senate continues. Decision Desk HQ has reported that the US President Donald Trump has officially taken the state of North Carolina as expected. 

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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