Daily Market Report - 30th Sep 2020

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EURUSD

The EUR/USD pair surged this Tuesday to 1.1745, its highest in a week, as the market started the day in risk-on mood, which in turn weighed on the greenback. The positive sentiment faded as the day went by, amid caution ahead of the US first presidential debate, and mounting concerns about the spread of COVID-19 as Autumn kicks in in the North Hemisphere. So far, the US seems to be better positioned within the pandemic, as the number of contagions has stabilized lately. In Europe, however, new restrictive measures are coming into place, and even German’s Chancellor, Angela Merkel, warned about the seriousness of the situation in Berlin.

In the data front, the EU published the September Economic Sentiment Indicator, which improved to 91.1 from 87.5 in the previous month. Germany released the preliminary estimate of September inflation, which was worse than anticipated, printing at -0.2% YoY. As for the US, the country has just published the August Goods Trade Balance, which showed that the deficit was of $-82.94B, worse than the previous $-80.11B. A positive surprise came from the CB Consumer Confidence report, which jumped to 101.8 in September, its highest level since the pandemic started.

This Wednesday will start with the mentioned presidential debate. Later in the day, Germany will publish August Retail Sales, foreseen at 4.2%. ECB’s President Lagarde is due to speak in the Institute for Monetary and Financial Stability, in Frankfurt. The US will publish several macroeconomic reports, although the most important will be the ADP survey on private jobs’ creation, foreseen at 648K from 428K in August.

The EUR/USD pair holds on to most of its intraday gains, near the 50% retracement of its latest daily decline. It’s technically bullish according to the 4-hour chart, as it keeps advancing above it 20 SMA, which turned marginally higher below the current level. Technical indicators, in the meantime, maintain their upward slopes well into positive territory, keeping the risk skewed to the upside. Further gains are to be expected on a break above 1.1780, where the pair has the 61.8% retracement of the mentioned slide.

Support levels: 1.1710 1.1660 1.1610

Resistance levels: 1.1780 1.1825 1.1870 

USDJPY

The USD/JPY pair has surpassed its previous weekly advance by a few pips, reaching 105.73, and trading nearby as the day comes to an end. The American currency remained weak against most major rivals, although it got to advance against the safe-haven yen, despite the sour tone of equities. European and US indexes spent most of their respective sessions in the red, as mounting coronavirus-related concerns weighed on investors’ mood. US Treasury yields, in the meantime, head lower amid caution ahead of the US presidential debate.

Japan published at the beginning of the day, September Tokyo inflation data. The CPI rose 0.2% YoY, below the 0.4% expected. However, the core reading resulted at -0.2%, slightly better than the -0.3% expected. This Wednesday, the country has quite a busy macroeconomic calendar, as it will publish August Retail Trade, foreseen at -3.5% YoY, and the preliminary estimate of Industrial Production for the same month, expected at 1.5%. Later into the session, Japan will publish August housing data.

The USD/JPY pair is neutral-to-bullish as it holds above the 61.8% retracement of its latest daily decline. The 4-hour chart shows that technical indicators lack directional strength, but also that they stand above their midlines. The pair, in the meantime, is trapped between moving averages, with the 20 and 100 SMA converging below the current level and the 200 SMA providing an immediate dynamic resistance level at around 105.80. Once above this last, the pair could extend its advance towards the top of the range at 106.26.

 Support levels: 105.40 105.00 104.60 

Resistance levels: 105.80 106.25 106.60

GBPUSD

The GBP/USD pair has held at the higher end of its latest range, with a limited bullish potential. Hopes for a Brexit trade deal maintained the Pound afloat, as representatives from the EU and the EU have said that a trade deal is still possible. Still, no progress has been officially reported. The UK currency suffered a setback with BOE Governor Bailey’s comments, as he said that the central bank is not out of ammunition when it comes to additional QE. He also said that policymakers have “not ruled out using negative interest rates but are realistic about challenges from banking retail deposits.”

Meanwhile, the UK reported over 7,000 new coronavirus cases in the last 24 hours, the highest daily increase since the pandemic took its toll in the kingdom. New restrictive measures have come into force this weekend in some parts of England. This Thursday, the UK will publish the final version of Q2 GDP, foreseen as previously estimated at -20.4%. Business investment in the same period is seen down 31.4%, also matching the preliminary estimate.

The GBP/USD pair is heading into the new day hovering around 1.2860, neutral-to-bearish according to intraday technical readings. The 4-hour chart shows that bulls are still unable to push the price beyond a bearish 100 SMA, currently at around 1.1870, although the 20 SMA keeps advancing below the current level. Technical indicators in the mentioned time-frame have lost directional strength, but remain within negative levels, indicating limited demand for the greenback.

Support levels: 1.2820 1.2770 1.2715

Resistance levels: 1.2900 1.2940 1.2990

AUDUSD

The AUD/USD pair advanced for a second consecutive day, trading near its daily highs in the 0.7130 price zone as Asian the US session comes to an end. The Aussie rallied on the back of the American dollar´s broad weakness, ignoring the sour tone of equities. Gold soared, providing additional support to the Australian currency.

This Wednesday, Australia will publish August Private Sector Credit and Building Permits for the same month. More relevantly, China will release the official NBS Manufacturing PMI, foreseen in September at 51.2 from 51 in August, and the Non-Manufacturing PMI for the same month, seen shrinking from 55.2 to 52.1.

The AUD/USD pair is firmly bullish and poised to extend its advance. The 4-hour chart shows that the pair advanced above its 20 SMA, which turned higher at around 0.7070, although it remains below the larger ones. Technical indicators, in the meantime, head firmly higher well above their midlines, anticipating another leg higher in the near-term. The pair has room to extend its advance beyond 0.7200, mainly if the sentiment improves.

Support levels: 0.7100 0.7060 0.7015

Resistance levels: 0.7170 0.7210 0.7250

GOLD

Gold extended its move up on Tuesday as the USD index DXY continued its retracement. The index slid below 94.00 level once again as fresh news about a new stimulus plan emerges. Fed’s dovish monetary policy will most likely continue until the inflation target is hit and a proper recovery in the labor markets are marked. Also, a new stimulus plan means more USD will be printed. Therefore, in the long run the precious metals will find more support with negative rates and extreme liquidity conditions. On the other hand, as the election in the US is only five weeks away, Gold might be a better option to protect investors against uncertainty and volatility.

Gold managed to get away from the critical support zone at $1,860. Below this 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 continued to outperform Gold as the USD index DXY extended its decline to Tuesday. Gold to Silver ratio is now testing 78.00 level as Silver lifted itself over the $24.00 level. On the other hand, Silver still lacks industrial demand support. The industrial activity around the globe is in a slow recovery mode and therefore Silver can’t find enough support from the demand side.

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 took a big hit on Tuesday as growing fears of new pandemic restrictions will most likely to hurt demand. The sudden move south came despite OPEC+ announced an extension to their output cuts to December. Also, the move came despite the decline seen in the USD index DXY. On the other hand, since the Democrats are in favour of renewable energy use in the US, Biden’s victory might pressure WTI further due to demand worries. 

WTI is rejected at its consolidation range border at $40.00. If WTI manages to hold over $40.56 ($65.62-$0.00 61.80%) level, the targets 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

After a three-day winning streak, Dow Jones faced a technical correction as the index gave away a portion of Monday’s gains in the light of the Biden-Trump debate. Due to the latest polls, Biden extends its lead in key states. On the other hand, the US House of Representatives Speaker Nancy Pelosi unveiled a new coronavirus relief bill which values at 2.2 trillion USD. Although there is progress in the bill talks, the package will most likely be clear after the elections in the US.   

If Dow Jones keeps its stance over 27,000 level decisively, 27,583 (June 2020 high), 28,000 and 28,402 levels can be followed as resistances. Below the 27,000 level, the supports can be followed at 26,000 with 25,210 (29,568-18,158 61.80%) and 24,690 (2020 April-May resistance) levels.     

Support Levels: 26,000 25,210 24,690

Resistance Levels: 27,583 28,000 28,402

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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