Daily Market Report - 24th Nov 2020

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EURUSD

The EUR/USD pair surged to 1.1905, amid coronavirus vaccine optimism pressuring the greenback, although the American currency resurged to post substantial gains against all major rivals. The dollar soared following the release of the preliminary estimates of the November Markit PMIs. The services index expanded from 56.9 to 57.7, its highest in over five years, while the manufacturing PMI printed 56.7, beating the expected 53. The official report states that “growth momentum picked up further,” also indicating the steepest monthly rise in hiring recorded since the survey began in 2009.

The EUR/USD pair plummeted towards the 1.1800 price zone, as EU data released earlier in the day failed to impress. Markit published the preliminary estimates of its November PMIs for the Union. According to the report, the recent lockdown measures to curb the spread of coronavirus led to “an accelerated decline in services activity” in Germany, with the Services PMI plummeting to 46.2 from 49.5. Manufacturing activity, however, picked up, with the index surging to 57.9. For the EU, the manufacturing index resulted at 53.6, better than anticipated, while the Services PMI fell to 45.1. 

This Tuesday, Germany will publish the final version of Q3 GDP, and the November IFO Survey, with the Business Climate seen down to 90.7 from 92.7. During US trading hours, the focus will be on the CB Consumer Confidence index, seen down to 98.3 from 100.9.

The EUR/USD pair recovered from a daily low at 1.1799, now trading around 1.1840. The risk is skewed to the downside in the near-term, with further declines expected on a break below 1.1790, the immediate support level. The 4-hour chart shows that the pair met support around its 100 SMA, but also that it has broken below a now mildly bearish 20 SMA. Technical indicators turned south but stabilized in neutral levels with the latest bounce.

Support levels: 1.1790 1.1745 1.1700

Resistance levels: 1.1885 1.1920 1.1965

USDJPY

The USD/JPY pair jumped from the 103.70 area to 104.63, waking up from its latest lethargy. The American currency soared after the Markit preliminary estimates of business activity in the US came in better than anticipated, indicating record hiring levels in November. Equities also reacted positively to the headline, although US indexes traded mixed with the Nasdaq lagging its peers. In the meantime, Treasury yields posted moderate advances.

Japan started the week with a holiday, which kept the local macroeconomic calendar empty. This Tuesday, it will only include a speech from BOJ’s Governor Haruhiko Kuroda.

The USD/JPY pair holds on to intraday gains, trading near the mentioned high. The 4-hour chart, however, shows that the bullish potential persists, as technical indicators have extended their advances within positive levels, as the price surpasses its 100 SMA for the first time in over a week. The 20 SMA is turning marginally higher. around 103.90, although it lacks strength enough to support a bullish continuation.

Support levels: 104.30 103.95 103.50 

Resistance levels: 104.65 105.00 105.40  

GBPUSD

The GBP/USD pair shed over 100 pips from a daily high at 1.3397, trimming daily gains on sudden demand for the greenback. The pound advanced throughout the first half of the day amid Brexit optimism, although EU’s negotiator Michel Barnier said that big differences persisted in trade talks but added that both sides were pushing hard for a deal, despite fundamental divergences still remain.

UK data provided additional support to the sterling. Manufacturing activity improved in November, according to Markit, as the Manufacturing PMI surged from 53.7 to 55.2. The services index contracted by less than anticipated, falling to 45.8 from 51.4. Tuesday will be light in the UK regarding macroeconomic data, although expectations mount about a Brexit announcement.

The GBP/USD pair has traded as low as 1.3263, recovering afterwards to the current 1.3320 price zone. Bulls retain control of the pair, as the 4-hour chart shows that it bounced from a bullish 20 SMA, which continues advancing above the larger ones. Technical indicators corrected overbought conditions, but the bearish momentum receded with indicators holding within positive levels, indicating limited selling interest, probably due to Brexit hopes.

Support levels: 1.3265 1.3210 1.3165 

Resistance levels: 1.3365 1.3410 1.3460

AUDUSD

The AUD/USD pair traded as high as 0.7336, failing once again to surpass the 0.7339 monthly high. It fell to 0.7264 with upbeat US data, now heading into the Asian opening trading around 0.7280. The commodity-linked currency was also weighed by the soft tone of gold, as the bright metal plunged to a fresh 4-month low of 1,830.82 a troy ounce.

Australian data published at the beginning of the day resulted upbeat, as the preliminary November Commonwealth Bank Manufacturing PMI improved to 56.1 from 54.2, while the services index for the same month surged to 54.0 from 53.7. This Tuesday, Australia will publish the October Trade Balance preliminary estimate, previously at 5630M.

The AUD/USD pair is neutral in the near-term, and according to the 4-hour chart. In the mentioned time-frame, the pair is currently below a directionless 20 SMA but still above a bullish 100 SMA. Technical indicators eased from their intraday highs, with the Momentum heading lower just above its 100 level and the RSI stable around 45. A short-term bearish extension is likely on a break below 0.7250, the immediate support level.

Support levels: 0.7250 0.7210 0.7170

Resistance levels: 0.7300 0.7345 0.7380  

GOLD

After the vaccine rally pressured Gold through $1,860 support, Gold failed to create enough momentum to regain its losses and broke the critical support testing its lowest level since the end of July. After Pfizer&BioNTech and Moderna, AstraZeneca announced that their vaccine candidate prevents an average of 70% of coronavirus cases. Apart from the risk appetite again fueled by the vaccine news, also the USD index DXY managed to gain traction on Monday moving though mid-92.00 levels with the help of the better than expected Markit Manufacturing PMI reading. At this point, the highly awaited stimulus deal is the only hope for precious metals to re-gain their lost ground as the positive sentiment supported by the vaccine news will most likely continue to pressure the safe-haven assets.  

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 lost its ground with Gold as the news from AstraZeneca hit the wires. At this point, the third company announced the success of the coronavirus pandemic lifted the market mood. Large precious metals speculators slightly trimmed their bullish net positions in the Silver futures markets last week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday indicating the increase in the risk appetite. The non-commercial futures contracts of Silver futures, traded by large speculators and hedge funds, totalled a net position of 45614 net contracts in the data reported through November 16th 2020. This was a weekly drop of 214 net contracts from the previous week. This marked the first drop in four weeks for speculative longs. The commercial trader’s position, hedgers or traders engaged in buying and selling for business purposes, totalled a net position of -61676 contracts on the week. This was a weekly change of -2134 net contracts.  

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 extended its bullish run to the fourth consecutive trading session on Monday as the market sentiment improved further with AstraZeneca’s announcement. AstraZeneca and the University of Oxford say their COVID-19 vaccine has an average efficacy of 70.4% after recording 131 coronavirus cases within its trial. One dosing regime has shown a higher level of 90% according to the interim results. On the other hand, the data published by the IHS Markit showed that the Manufacturing PMI and the Services PMI both continued to improve in November and provided a boost to risk sentiment. The ongoing expansion in the private sector's economic activity is also pointing out to a rebound in oil consumption in the US.  

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 ended its technical correction on Monday as AstraZeneca and the Oxford University became the third successful consortium to announce success on the coronavirus vaccine. The vaccine, developed with the University of Oxford, showed 90% efficacy in one dosing regimen -- when the vaccine was given to 2,741 people as a half dose, followed by a full dose at least a month later -- and 62% efficacy in a second regimen -- when two full doses were given to 8,895 people at least a month apart. That averages to a 70% efficacy, AstraZeneca said on Monday. With the immediate effect, the US and EU indexes rallied while precious metals faced a sell-off. The USD index DXY managed to regain 92.50 levels while the US 10-year yield also rallied to 0.855 levels. On the other hand, the IHS Markit's Manufacturing Purchasing Managers' Index (PMI) for the US edged higher to 56.7 in November from 53.4 in October to show that the economic activity in the manufacturing sector continued to expand at a robust pace. This reading beat the market expectation of 53 by a wide margin. Furthermore, the Services PMI rose to 57.7 from 56.9 and surpassed the analysts' estimate of 55.3 signalling the normalisation in the economic activity in the US.    

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.

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