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EURUSD
The EUR/USD pair recovered from a 4-week low at 1.1752, to end this Wednesday with modest gains a handful of pips above the 1.1800 figure. The market’s sentiment was sour for most of the day, as AstraZeneca and the Oxford University announced they paused trials for its coronavirus vaccine amid “an unexplained illness” in one participant. The dollar changed course against all major rivals following news indicating that some ECB policymakers have become more confident in their forecasts for the region’s economic recovery, potentially reducing the need for more monetary stimulus this year. Also, equities put a halt to their latest rout, with Wall Street recovering nicely.
The macroeconomic calendar was scarce, as it only included the US JOLTS Job Openings, which were up in July 6.618M, better than the 6M expected. This Thursday, the focus will be on the ECB. The central bank is widely expected to maintain the status quo, and there’s some speculation that today headlines were a way to soften the impact of a not that dovish statement.
The EUR/USD pair peaked at 1.1833, but the intraday spike fell short of suggesting further gains ahead. The 4-hour chart shows that the pair keeps developing below all of its moving averages, with the 20 SMA heading lower below the larger ones. Technical indicators, in the meantime, recovered from their daily lows, but lost directional strength within negative levels. The pair would need to accelerate above 1.1840 to turn bullish, while renewed selling pressure below 1.1760 while likely result in a steeper decline sub-1.1700.
Support levels: 1.1760 1.1710 1.1680
Resistance levels: 1.1840 1.1880 1.1925
USDJPY
The USD/JPY has remained within familiar levels during this third trading day of the week, bottoming at 105.78 to later recover towards the 106.20 price zone, where it stands ahead of the Asian opening. As usual, the sentiment led the way throughout the day, with the pair initially falling on the back of risk-off, later recovering with equities and yields. The yield on the benchmark 10-year note recovered the 0.70% level.
At the beginning of the day, Japan published the preliminary estimate for Machine Tools Orders, which were down in August 23.3%, following a 31.1% slump in the previous month. This Thursday, the country will release July Machinery Orders, seen up 1.9% in the month, after falling 7.6% in June.
The USD/JPY pair is neutral as it has spent over a week around the current levels, confined to tight intraday ranges. The 4-hour chart shows that, after recovering some ground, technical indicators lost their bullish strength, now hovering around their midlines. The pair, in the meantime, is ending the day above its moving averages, which anyway remain directionless. The pair needs to break either above 106.70 or below 105.50 to find some directional momentum.
Support levels: 105.90 105.50 105.10
Resistance levels: 106.35 106.70 107.10
GBPUSD
The GBP/USD pair plunged to 1.2884 following news that the UK introduced in Parliament an Internal Market Bill, meant to protect jobs in the kingdom after the transition period ends next December. The bill sounded all the alarms, as it may impact the UK’s relationship with the EU, given that it could re-write parts of the Brexit Withdrawal Agreement, particularly related to the Northern Ireland Protocol. European Commission President Ursula von der Leyen said that “breaching the Withdrawal Agreement would break international law and undermine trust.”
The pair changed course with EU news putting a halt to the dollar’s demand, helping it to recover towards the 1.3020 price zone. The UK didn’t publish macroeconomic data this Wednesday, and the macroeconomic calendar will remain scarce this Thursday, as it will only release the RICS House Price Balance, foreseen in August at 25% from 12% in the previous month.
The GBP/USD pair is now trading below the 1.3000 level, as speculative interest is inclined to leave longs with all the Brexit noise. The 4-hour chart shows that the pair has held far below all of its moving averages, with the 20 SMA extending its decline below the 100 and 200 SMA. The RSI indicator corrected oversold conditions before losing strength upward, while the Momentum stabilized within negative levels, all of which keeps the scale lean to the downside.
Support levels: 1.2965 1.2930 1.2890
Resistance levels: 1.3045 1.3090 1.3130
AUDUSD
The AUD/USD pair is up this Wednesday, trimming its weekly losses and trading in the 0.7270 price zone ahead of the Asian opening. The Aussie advanced ever since the day started, backed during Asian trading hours by encouraging local data. The Australian September Westpac Consumer Confidence came in at 18%, improving from -9.5% in the previous month. Also, Home Loans surged in July 10.7&, beating the 3.1% expected. China reported its August inflation, which met the market’s expectations, rising 2.4% YoY.
The commodity-linked currency found additional support in equities, which ended the day in the green, and gold prices, as the bright metal recovered further, ending the day around $1,950 a troy ounce. The country will publish this Thursday, September Consumer Inflation Expectations, previously at 3.3 %.
The AUD/USD pair hit a daily high of 0.7287, and while it’s ending the day with gains, further gains are not yet clear. The 4-hour chart shows that the pair has finished the day above all of its moving averages, with the 20 and 100 SMA converging around 0.7260, providing dynamic support. Technical indicators, in the meantime, have turned flat after reaching their midlines, suggesting little buying interest at the time being. The weekly high stands at 0.7308 with bullish chances to increase on a break above this last.
Support levels: 0.7260 0.7215 0.7170
Resistance levels: 0.7310 0.7350 0.7385
GOLD
Gold had a strong move-up on Wednesday as the USD index DXY faced a decline and Wall Street had a reversal along with the incline in the US yields. On the other hand, apart from the effect of the USD, Brexit also started to create uncertainty on the market as two of the UK government’s most senior legal advisors quit over professed plans to remove portions of the Brexit Withdrawal Agreement. More specifically, the UK plans to revoke its agreement to keep Northern Ireland aligned with EU customs rules. The latest pullback seen in precious metals can be considered as a technical move as the markets conditions in clear favour of Gold for the long run. As a sign of that, Gold-backed exchange-traded funds (ETFs) and similar products recorded their ninth consecutive month of inflows in August, although at their slowest pace for this year, adding 39 t during the month – equivalent to $2.1-billion, or 0.9%, of assets under management (AUM) as the price of gold reached a record high of $2 067/oz early in August.
As long as Gold stays over 1.950$, the targets upside can be followed at 1.980$ (previous all-time high), 2.000$ and 2.040$ levels. Below the 1.950$ the supports can be followed at 1.920$, 1.900$ and 1.825$ (2011 August close) levels.
Support Levels: 1.920$ 1.900$ 1.825$
Resistance Levels: 1.980$ 2.000$ 2.040$
SILVER
Silver managed to erase its losses made on Tuesday alongside Gold while the USD index DXY retraced back. Both Gold and Silver build a strong base against further declines as the current liquidity environment is supporting the non-yielding metals. Also, in the future, further incline in inflation around the globe will most likely push real rates more into the negative zone boosting precious metal prices. Gold to Silver ratio once again slid to 72.00 level as a sign of recent Silver strength.
If Silver manages to stay over 27.00$, next targets upside might be followed at 29.28$ (March 2013 resistance) and 30.00$ levels. Below the 27.00$ level, the supports might be followed at 25.00$, 24.00$ and 23.38$ levels.
Support Levels: 25.00$ 24.00$ 23.38$
Resistance Levels: 27.00$ 29.28$ 30.00$
CRUDE WTI
WTI bounced on Wednesday after five consecutive days of decline. On the other hand, the move-up was not enough to test 40.00$ as demand fear is far from over. On Wednesday, the US Energy Information Administration (EIA) downgraded their 2020 global oil demand growth forecast by 210,000 barrels per day to 8.32 million barrels per day (BPD). In its monthly forecast, the EIA also cut its oil demand growth estimate for 2021 by 490,000 BPD to 6.53 million BPD. However, while August oil demand rose to 94.3 million barrels per day in August. Also in its report, EIA stated that the US oil production is rising again with an average of 10.8 million BDP in August after dropping to 10 million BDP in May. Despite the cut in demand expectations, WTI managed to stop its decline at 36.00$.
Technically speaking, 33.00$ zone stands as the breakdown level to confirm a bear market has started. Below the 37.00$, the supports can be followed at 33.23$ (0.00$-43.49$ %23.60), 26.88$ (0.00$-43.49$ %38.20) and 21.75$ (0.00$-43.49$ %50.00). Over the 37.00$ zone, resistance can be followed at 39.00$, 40.00$ and 42.00$ zone (July-august consolidation range).
Support Levels: 33.23$ 26.88$ 21.75$
Resistance Levels: 39.00$ 40.00$ 42.00$
DOW JONES
Dow Jones had a sharp reversal on Wednesday led by the tech-related stocks after a series of heavy declines. Apart from the current market conditions, the US elections started to weigh on the risk sentiment more and more each day as Biden widened the gap to Trump. August's Non-Farm Payrolls statistics showed the unemployment rate sharply fell to 8.4% forcing the Republicans to lower their stimulus offer to below 1 trillion USD. The generosity of Trump seems like not working as polls showed that Biden is leading the presidential race. The USD once again declined to 93.00 zones while precious metals also rallied alongside Wall Street. The move-up came despite a statement from AstraZeneca and the Oxford University as they announced that they paused trials for its coronavirus vaccine amid “an unexplained illness” in one participant.
From the technical point of view, over the physiological 28.000 level, 28.400 can be followed as next resistance while below 27.770 level the supports can be seen at 27.400, 27.000 and 26.757 (24.680-27.400 %23.60) levels.
Support Levels: 27.700 27.400 27.000
Resistance Levels: 28.400 29.000 29.500
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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