Daily Market Report - 13th Nov 2020

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EURUSD

The EUR/USD edged higher on Thursday as investors moved away from equities. The dollar, however, got to recover some ground ahead of the close. Speculative interest turned cautious amid concerning coronavirus data coming from the EU and the US. The number of newly reported coronavirus cases is growing exponentially, and the health systems are stressed. New York has been the latest of several US cities announcing a curfew in an attempt to contain the spread.

European macroeconomic figures failed to impress and limited EUR’s advance. The EU September Industrial Production fell by 0.4% in the month and was down 6.8% when compared to a year earlier, missing the market’s expectations. Germany reported the final reading of October inflation, which met the market’s forecast. In the US, however, CIP figures came worse than anticipated. The core Consumer Price Index ex Food and Energy printed at 0.% MoM and contracted to 1.6% YoY. Initial Jobless Claims for the week ended November 6, however, improved to 709K.

This Friday, the EU will publish the second estimate of Q3 GDP, foreseen unchanged at 12.7%, while the US session will bring the preliminary estimate of the November Michigan Consumer Sentiment Index, foreseen at 82 from 81.8 in October.

The EUR/USD pair has spent most of the last session consolidating around the 1.1800 level, the 38.2% retracement of its latest daily advance. The 4-hour chart shows that the pair is incapable of advancing beyond a bearish 20 SMA, while technical indicators have recovered from daily lows to stabilize around their midlines, all of which indicate a limited buying interest. The pair is advancing on the dollar’s weakness and may retest the 1.1920 price zone, although sustainable gains are still unlikely.

Support levels: 1.1770 1.1725 1.1680 

Resistance levels: 1.1840 1.1885 1.1920

USDJPY

The USD/JPY pair eased on Thursday, trading at the time being a few pips above the 105.09 daily low. European stocks’ markets closed in the red, and Wall Street followed the lead, amid concerns related to the pandemic spread in the northern hemisphere. Demand for government bonds returned, with yields edging lower. The yield on the benchmark 10-year note fell to 0.89%, reflecting investors’ concerns.

As for macroeconomic data, Japan published September Machinery Orders, which fell by 11.5% YoY, better than anticipated. The Tertiary Industry Index in the same month rose 1.8% MoM. The October Producer Price Index came in at -0.2% MoM as expected. The country’s macroeconomic calendar has nothing to offer this Friday.

The USD/JPY pair is neutral in the short-term, although the risk has turned to the downside. The 4-hour chart shows that the pair is below its 20 SMA and about to pierce the 200 SMA, which provided support throughout the week. Technical indicators are stuck around neutral levels, with the RSI slowly grinding lower. The bearish potential will increase on a break below the 104.90 support level.

Support levels: 104.90 104.50 104.05

Resistance levels: 105.65 106.00 106.40

GBPUSD

The GBP/USD pair fell for a second consecutive day, bottoming at 1.3107 and ending the day not far above this last. Tepid UK data caused sterling to fall, as the preliminary estimate of Q3 Gross Domestic Product missed expectations, although it advanced by 15.5%. September Industrial Production posted a modest 0.5% monthly advance but fell by 6.3% YoY, missing expectations. The same happened with Manufacturing Production, which contracted 7.9% from a year earlier. A dismal market mood provided support to the dollar in the final trading session of the day.

 The GBP/USD pair has turned bearish in the near-term, accelerating south after losing the 1.3200 threshold. The 4-hour chart shows that the slump extended once the pair broke below its 20 SMA, although the pair is still above the larger ones. Technical indicators, in the meantime, have neared oversold conditions, holding near its daily lows. The pair has an immediate support level at 1.3090, with a steeper decline expected once this last gives up.

Support levels: 1.3090 1.3050 1.3010

Resistance levels: 1.3140 1.3185 1.3230

AUDUSD

The AUD/USD pair remained confined to a tight intraday this Thursday, although it lost some ground and trades at the lower end of its weekly range in the 0.7230 price zone. The Australian dollar was weighed at the end of the day by a dismal market mood, which helped the greenback recover some ground during the American afternoon.

Australia published at the beginning of the day November Consumer Inflation Expectations, which improved from 3.4% to 3.5%, also beating expectations of 3.2%. The country won’t publish relevant macroeconomic figures this Friday.

The AUD/USD pair is at risk of falling further in the near-term and according to the 4-hour chart. In the mentioned time-frame, it has extended its decline below its 20 SMA, which gains bearish traction. Technical indicators have fallen into negative territory, now hovering around their daily lows. The immediate support level is 0.7210, although the bearish case will be stronger on a break below 0.7170.

Support levels: 0.7210 0.7170 0.7115

Resistance levels: 0.7260 0.7300 0.7345 

GOLD

The risk appetite fueled by the vaccine news switched to a more cautious tone as the current reality of the pandemic started to weigh on markets. After the massive retracement seen in Gold on Monday, the yellow metal is trying to find a balance between $1,885 and $1,860 levels. The USD index DXY is hovering around 93.00 level while the US 10-year yields retraced to 0.89 from 0.97. The market driver switched from the US elections to pandemic quite fast. Therefore, market moves will be similar to the pre-election period where developments about the pandemic and its effect on the much-awaited stimulus package will drive the markets.      

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 is keeping its balanced move over the $24.00 level as the markets are still digesting the developments about the vaccine. Apart from the usual trading schema of the precious metals, silver is giving some extra hints for a potential rally. In 2020, up to now, the US Mint. has sold 27.2 million ounces of silver in American Eagle coins alone while in 2019 it was only 14.8 million coins. The same scenario is the same in Canada and Australia showing the strong physical demand for the Silver. Therefore, Silver might be a good bet for the post-pandemic era due to its physical moves.

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

CRUDE WTI

After hitting to its highest level in 10 weeks at $43.00 level, WTI continues to give away its gains. Vaccine hopes carried WTI to $43.00 levels but stock and supply worries started to build on WTI. Crude Oil Stocks Change in the US was +4.3 million barrels in the week ending November 6th, the weekly report published by the US Energy Information Administration (EIA) revealed on Thursday. Also, the IEA reported that the global oil demand might drop by nearly 9 mbpd this year, while supply could increase by more than 1 mbpd on a monthly basis in November. Analysts estimate was for a decrease of 0.9 million barrels. While the national lockdowns are creating demand worries, the latest stock data set indicates the oversupply conditions.      

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

Dow Jones extended its decline on its way to close the massive bullish gap made on Monday. While the vaccine news created a big increase in the risk appetite, the current reality of the record number of new cases and casualties even worse than the first wave started to weigh on the markets again. Elections and the stimulus deal expectations seem like they are not driving the markets at the moment until a new positive development. The USD index DXY is trying to keep 93.00 level while the US 10-year yields retraced from its current highs. The headline CPI remained flat in October and the yearly rate fell to 1.2% from 1.4% in the previous month. Meanwhile, core CPI (excluding energy and food costs) also fell short of market expectations and edged lower to 1.6% from 1.7% previous. On the other hand, the US Initial Jobless Claims fell more-than-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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