Daily Market Report - 23th Dec 2020

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EURUSD

The EUR/USD pair traded as high as 1.2256 on Monday, but changed course during US trading hours and settled near a daily low of 1.2155, as the dollar surged on persistent Brexit concerns. Currency pairs are quite volatile in thinned market’s conditions ahead of the Christmas Holidays, and profit taking is also playing a role in this week´s market’s action.

Germany published the GFK Consumer Confidence Survey, which printed at -7.3 in January, better than the -9.5 forecast. As for the US, the Q3 GDP annual reading was upwardly revised to 33.4%, although Consumer Confidence in the country plummeted to a four-month low of 88.6 amid resurging coronavirus cases in the US.

This Wednesday, the macroeconomic calendar will include the November Import Price Index, while the US will release November Durable Goods Orders, seen up 0.6% in the month. The country will also publish Initial Jobless Claims for the week ended December 18.

The EUR/USD pair is bearish according to intraday charts, although the long-term trend remains firmly in place. The 4-hour chart shows that the pair was unable to hold on to gains above its 20 SMA that has turned bearish. A bullish 100 SMA provides dynamic support around 1.2120. Technical indicators have reached fresh weekly lows, reducing their bearish momentum but still pointing to a new leg lower.

Support levels: 1.2120 1.2080 1.2030

Resistance levels: 1.2205 1.2240 1.2280

USDJPY

The USD/JPY pair advanced during US trading hours amid the resurgent demand for the American currency. The pair topped at 103.73 and currently trades a handful of pips below this last. Equities trade mixed, although European indexes managed to close with modest gains, reverting their early losses. US Treasury yields remained unchanged, underpinned by news that the US Senate voted to approve a $900 billion coronavirus relief package tied to a funding bill. The House approved the measure, and it now needs to be signed by US President Donald Trump.

The Japanese macroeconomic calendar remained empty on Tuesday, but the Bank of Japan will publish this Wednesday the Minutes of its latest monetary policy. Later in the day, the country will release the October Leading Economic Index and the Coincident Index for the same month.

The USD/JPY pair has limited bullish potential as long as it trades below the 104.30 level. The 4-hour chart shows that a flat 20 SMA has continued to provide support, although the longer moving averages maintain their bearish slopes above the current level. Technical indicators are above their midlines, the Momentum advancing within range, and the RSI flat at 54. The bearish case will become clearer on a break below 103.15.

Support levels: 103.15 102.70 102.20 

Resistance levels: 103.50 103.90 104.30

GBPUSD

The GBP/USD pair has resumed its decline this Tuesday, undermined by the latest Brexit-related headlines. On Monday, the UK was said to have made an offer on fisheries that EU representatives were studying. However, the EU's chief Brexit negotiator Michel Barnier reported to the EU’s 27 representatives in Brussels that fisheries remain the stumbling block in trade talks with the UK.

The UK published its final Q3 GDP, which was upwardly revised from 15.5% to 16% YoY, and total Business Investment for the same period, which resulted at 9.4% vs the previous estimate of 8.8%. There won’t be macroeconomic data coming from the kingdom this Wednesday.

The GBP/USD pair is under selling pressure and poised to extend its decline. The 4-hour chart shows that technical indicators have resumed their declines within negative levels after correcting extreme oversold conditions. In the mentioned time-frame, the pair is developing below a firmly bearish 20 SMA and below its 100 SMA. A steeper decline and lower lows for the week are expected on a break below 1.3187, the low set on Monday.

Support levels: 1.3410 1.3365 1.3320

Resistance levels: 1.3495 1.3550 1.3600

AUDUSD

The AUD/USD pair was unable to retake the 0.7600 threshold despite encouraging Australian data, ending the day in the red amid a persistent dismal mood. The Australian dollar found temporal support in local Retail Sales, as the preliminary estimate of the November reading came in at 7%, largely surpassing the previous 1.4%. The pair posted a daily low of 0.7516 during the American afternoon, dragged by the poor performance of Wall Street.

Early on Wednesday, Australia will publish the November Trade Balance and Private Sector Credit for the same month.

The AUD/USD pair is at risk of extending its decline in the near-term, according to the 4-hour chart. The pair remains below a bearish 20 SMA, although above bullish larger ones. Technical indicators have resumed their declines within negative levels, in line with a bearish continuation towards 0.7470, a strong static support level.

Support levels: .7515 0.7470 0.7430

Resistance levels: 0.7555 0.7600 0.7640

GOLD

Gold retraced to its important support at $1,860 as the USD index DXY managed to gain ground on Tuesday. DXY managed to re-gain 90.50 levels while the US 10-year yields also retraced to 0.92%. The panic triggered by the new version of the virus was short-lived as the scientists behind the vaccines announced that it is most likely that there will be no need for a new vaccine for the mutations at the moment. The US Congress passed a long-awaited $892 billion coronavirus aid package on Monday, alongside a $1.4 trillion measure to keep the government funded for another year. The bill is now under review by the Senate and will become law once passed and signed by the US President Donald Trump. While the stimulus deal was already priced in the markets, at this point there is not much talk about the initial plan from the Democrats which was at the $2 trillion level. Therefore, if the pandemic continues to pressure the markets furthermore, there might be another round of stimulus package on the table to support the US citizens. In that case, precious metals will likely be boosted by the decline in USD caused by extra liquidity.

Gold tested its highest level since mid-November while the US 10-year continues its uptrend at 0.94%. 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 retraced back and outperformed Gold on Tuesday as the USD index DXY managed to gain ground and lift itself to mid-90.00 levels. Markets are trying to get away from the news about the virus variant as the traders are heading into the Christmas and New Year holiday. On the other hand, the stimulus deal is waiting for President Trump’s approval as it was already priced in the markets. Apart from the monetary and virus developments, precious metals are entering into a positive period as the Chinese New Year traditional buying season of January and February is getting closer. 

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

DOW JONES

Global markets faced pressure due to the new variation of the virus on Tuesday despite the positive announcements from the vaccine developers that the current solutions are most likely enough to fight with the new mutation of the virus. The UK government announced that large portions of London and the South East of the UK will be going into a new tier 4 lockdown, which is akin to the national lockdowns seen in H1 2020 and November, as the area struggles to contain the outbreak of a new, more virulent strain of Covid-19. Also, the UK is put under quarantine from the other European countries by limiting transport which caused chaos as a record number of trucks lined up at the French border waiting for a decision. On the other hand, the US Congress finally passed the $900 billion COVID-19 relief bill with the Senate approving it last night. Among other things, the bill includes $600 payments to most Americans, a $300 enhancement of jobless benefits and extension of the enhancement by 11 weeks that unemployed can receive benefits besides the corporate support. Today the economic docket will be busy in the US due to the short Christmas week. Weekly labour data readings will be announced today instead of Thursday with the consumption expenditures data set.

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 

WTITITIIT

WTI continued its move south as the virus developments continued to weigh on oil prices. The new string of coronavirus in the UK forced major European economies to shut their borders and many countries announced travel restrictions, reviving concerns over an unsteady recovery in global energy demand. On the other hand, it has been reported that Russia is getting ready to offer an increase in the production of 500,000 barrels per day during the upcoming OPEC+ meeting in February. As the normalisation in the pandemic is far from reach, production increase plans are putting extra pressure on oil prices at the moment. Whşe the stimulus checks are expected to create extra demand for oil, lockdown measures that block travelling are holding WTI to benefit the deal at the moment.

Next supports can be seen at $47.00, $45.00 and $43.88 respectively while the resistances can be followed at $48.00, $48.50 and $49.00 levels.

Support Levels: $47.00 $45.00 $43.88

Resistance Levels: $48.00 $48.50 $49.00

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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