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EURUSD
The EUR/USD pair posted a modest advance last Friday, ending the week unchanged around 1.1840. Weaker demand for the dollar was the main driver of the pair, as the American currency remained out of the market’s radar throughout the first half of the day. It recovered some poise in the final trading session of the week, following the release of upbeat US inflation. According to the official report, core annual inflation picked up in August, improving to 1.7% from 1.6% in the previous month. German inflation, on the other hand, was confirmed at -0.1% YoY. The market’s mood, however, remained sour, with equities pulling off their highs ahead of the close to end the day mixed.
Over the weekend, AstraZeneca and Oxford announced they would resume their coronavirus-vaccine tests, which were interrupted due to possible side effects in one participant. The news could bring back risk-on, although temporarily. This Monday, the EU will publish July Industrial Production, seen up 10% in the month, while the US macroeconomic calendar will remain empty.
The EUR/USD pair is trading around the 38.2% retracement of its September decline, neutral-to-bullish in the daily chart. It’s stuck around a flat 20 DMA but holding above the larger ones, while technical indicators are modestly advancing above their midlines. In the shorter-term, and according to the 4-hour chart, however, the bullish potential is limited. The pair is hovering around directionless moving averages, the Momentum indicator turned lower within positive territory, while the RSI indicator consolidates within neutral levels. The pair could become more interesting for bulls once above 1.1915, the 61.8% retracement of the mentioned decline.
Support levels: 1.1810 1.1760 1.1725
Resistance levels: 1.1860 1.1915 1.1950
USDJPY
The USD/JPY pair closed the week as it started in the 106.10 price zone, unable to attract speculative interest ever since the month started. On Friday, the pair remained confined to a tight 20 pips’ range, with its behavior tied to that of US Treasury yields. Japanese data failed to impress, as the country published the August PPI, which was up 0.2% in the month, but declined 0.5% when compared to a year earlier. The Q3 BSI Large Manufacturing Conditions Index came in at 0.1, improving from -53.3 and much better than the -44.2 expected.
This Monday, the country will publish July Industrial Production and Capacity Utilization, and the Tertiary Industry Index for the same month, foreseen at 5.2% from 79% in June.
The USD/JPY pair is technically neutral, although, in the longer-term perspective, the risk skews to the downside. The daily chart shows that the price has been stuck around the 20 DMA for over a week already, while below the larger ones, which maintain modest downward slopes. Technical indicators, in the meantime, head nowhere around their midlines. In the 4-hour chart, the technical picture is also neutral, as the pair is just above congesting moving averages, while technical indicators stand around their midlines.
Support levels: 105.90 105.50 105.10
Resistance levels: 106.35 106.70 107.10
GBPUSD
The sterling was the worst performer last week, smashed by mounting tensions between the UK and the EU reducing chances of a trade deal by the end of the Brexit transition period between the two economies. The GBP/USD pair lost roughly 500 pips last week after UK PM Johnson sent the Parliament the Internal Market Bill, which allows the kingdom to change the Withdrawal Agreement. In response, the EU has threatened with legal actions. Talks last week ended without progress, with differences in important areas still unresolved.
Mixed UK data further pressured the local currency. July monthly GDP came in at 6.6%, below the 6.7% expected and the previous 8.7%. Industrial Production in the same month came in at -7.8%, better than expected but still negative. Consumer Inflation Expectations contracted to 2.8% from 2.9% previously. This Monday, the focus will be in the kingdom’s Parliament, as lawmakers will discuss the mentioned Internal Market Bill.
The GBP/USD pair settled at 1.2795, a level that was last seen in July, not far from a weekly low of 1.2762. In the daily chart, the bearish case is clear, as the pair is now well below its 20 DMA while barely holding above the larger ones, which anyway lack directional strength. Technical indicators have decelerated but stand at daily lows within negative levels. In the 4-hour chart, the 20 SMA heads firmly lower below the larger ones, as technical indicators turned flat well into negative territory.
Support levels: 1.2760 1.2715 1.2665
Resistance levels: 1.2840 1.2885 1.2930
AUDUSD
The AUD/USD pair recovered the ground lost at the beginning of the week on Friday, to settle int he 0.7280 price zone. Aussie traders got little clues last week, as the Australian macroeconomic calendar was scarce these days. Nevertheless, the Australian currency was quite resilient, considering the sour tone of equities. Helping the pair to hold near the 0.7300 level was the decreasing demand for the American currency.
Australia won’t publish data at the beginning of the week, which means that the pair will likely continue depending on sentiment. However, the calendar will include these days the RBA Meeting Minutes and August employment data, both capable of spurring some action.
The AUD/USD pair is neutral-to-bullish according to the daily chart, as it has held above around a mildly bullish 20 DMA, while the larger ones remain below it, with the 100 DMA maintaining its bullish slope. Technical indicators, in the meantime, hold within positive levels with limited upward strength. In the shorter-term, and according to the 4-hour chart, the pair met buyers around converging 20 and 100 SMA, which lack directional strength. The Momentum indicator turned lower within positive levels, while the RSI hovers around 52. The pair could turn bearish only on a break below 0.7170.
Support levels: 0.7250 0.7215 0.7170
Resistance levels: 0.7310 0.7350 0.7385
GOLD
Gold retreated further on Friday after reaching the highest level in a week on Thursday at $1,966 following the European Central Bank (ECB) meeting. It found support at $1,935 and finished the week with marginal gains around $1,940. The resilience of the U.S. dollar against G10 currencies offset the modest decline in U.S. yields that usually boost metals. For gold and yields, the FOMC meeting on Wednesday represents a risk event ahead.
The spike in XAU/USD to $1,966 was quickly reversed, and the consolidation bias remains intact, with the 20-day moving average now flat near $1,950. As gold keep trading sideways, it would likely approach the bottom of the current range. The first support stands around $1,920 that protects $1,905. A break below $1,900 should clear the way to more losses, targeting the August low at $1,860. On the upside, above $1,975 would expose the $2,000 level.
Support Levels: $1,935 $1,905 $1,860
Resistance Levels: $1,978 $2,015 $2,040
SILVER
Like gold, silver remains neutral, moving sideways awaiting the breakout that should lead to an extension of the correction or a resumption of the rally. While equity prices corrected lower over the last two weeks, silver kept moving sideways. While before the correction in equities, it failed to rise further, holding steady while many financial assets pulled back could be seen as a sign of strength. With busy days ahead, between Brexit, the FOCM and BoE meetings, among others, the neutral bias will likely be challenged.
From a technical perspective, silver continues to consolidate and keeps moving sideways around $26.70, with a modest bearish bias as it remains under the 20-day moving average that stands near $27.00. A daily close cleary above could change the short-term bias to the upside. The next resistance stands at $27.70, followed by $28.30. On the downside, a close below $26.50 would point to a test of the critical support of $26.00.
Support Levels: $26.00 $24.50 $23.40
Resistance Levels: $27.00 $28.30 $29.15
CRUDE WTI
West Texas Intermediate crude oil ended Friday modestly higher but posted its second weekly loss in a row. WTI recorded a 5.4% weekly decline, following an 8.16% loss the previous week.
On Friday, WTI spent most of the day alternating gains with losses around the $37.00 level per barrel and finished at $37.30, up 0.79%. During the second half of the week, WTI prices managed to pare losses amid a mildly positive market sentiment and stabilized above $37.00 a barrel after Tuesday’s steep selloff.
From a broader perspective, demand concerns continue to weigh on crude prices as COVID-19 pandemic continues to disrupt production across the globe. From the supply side, both API and the EIA reported (on Wednesday and Thursday) unexpected increases in US oil inventories. Data released on Friday by Baker Hughes showed US rig oil count stood steady at 180 versus 181 the previous week.
The technical perspective remains tilted to the downside in the short-term, although indicators have lost bearish momentum as the price entered a consolidative phase over the last trading days. The weekly low set on Tuesday at $36.10 is a key support level. A break there could pave the way to mid-June lows at the $34.50 area. On the flip side, if WTI manages to recover the $38.50 zone, the bounce could extend toward last week’s highs at the $39.50 area, en-route to the $40.00 level.
Support Levels: $36.10 $35.40 $34.50
Resistance Levels: $37.60 $38.50 $39.50
DOW JONES
The Dow Jones Industrial Average edged higher on Friday and gained 131.06 points, or 0.48%, ending at 27,665. Still, for the week, the DJIA lost 1.7%, posting the second weekly decline in a row. Meanwhile, the S&P 500 finished Friday 0.05% higher while recording a 2.5% weekly loss. The Nasdaq Composite dropped 0.6% on Friday and was the worst-hit shedding 4.1% for the week.
US stocks extended the corrective move last week, with tech stocks weighing down broader markets. Adding to pressure on equities, the US Senate failed to pass a relief package, while political uncertainty ahead of the presidential elections continues to cast a shadow on market sentiment.
From a technical view, the DJIA holds a slightly negative tone in the short term, although it seems to have found decent support at the 27,400-27,500 area. A break below could trigger another leg lower, with next support seen at 27,000, followed by the significant 26,600 area. On the upside, weekly highs at the 28,200 area offer initial resistance. A recovery of this latter could ease the immediate pressure and put the focus on the next hurdle at 28,750 ahead of its seven-month high strike at 29,199 last week.
Support Levels: 27,400 27,000 26,600
Resistance Levels: 28,200 28,750 29,200
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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