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EURUSD
The American dollar recovered some ground on Friday amid risk-off but ended the week in the red against most of its major rivals. The EUR/USD pair settled at 1.1715, as news that US President Trump contracted COVID-19 overshadowed everything else. Wall Street closed in the red, as the sentiment got further undermined by a weak Nonfarm Payroll report. According to the official release, the US added 661K new jobs in September, much worse than the 850K expected. The unemployment rate in the same period ticked down to 7.9% from 8.4%, beating the 8.2% expected.
Throughout the weekend, conflicting headlines about Trump health’s progress flooded news feeds, after being hospitalized late Friday. On Saturday, he made a statement saying that he felt “much better” while receiving a remdesivir treatment. He added that the real test would be the next few days. Risk aversion will likely prevail at the beginning of the week, and sentiment’s shifts will probably correlate to headlines related to the US President’s health.
The macroeconomic calendar will include the final versions of September Markit Services PMIs for the EU and the US. The EU will also publish August Retail Sales, seen up 0.9% MoM, while the US will release the official ISM Services PMI, foreseen in September at 56 from 56.9 in the previous month.
The EUR/USD pair is bearish according to the daily chart, as the 20 DMA capped advances, now hovering around the weekly high and a major Fibonacci resistance level at 1.1770. Technical indicators in the mentioned time-frame turned south within negative levels. In the shorter-term, and according to the 4-hour chart, the pair is neutral-to-bearish, as while technical indicators stand flat around their midlines, it is developing below all of its moving averages. The pair is stuck around the 38.2% retracement of its latest daily decline, with the next relevant support at 1.1670, the 23.6% retracement of the same slump.
Support levels: 1.1670 1.1625 1.1580
Resistance levels: 1.1725 1.1770 1.1810
USDJPY
The USD/JPY pair finished the week with modest losses in the 105.30 price zone, after printing a weekly low of 104.93. The pair fell sharply on news that US President Trump and wife Melania contracted COVID-19. As the day went by, the market knew that several members of the campaign staff had also caught the virus. The pair recovered, despite a dismal US employment report and the poor performance of Wall Street, finding support in government debt yields, which closed the day in the green and off weekly lows.
Japanese data published last Friday was mixed, as the August unemployment rate came as expected at 3%, worse than the previous 2.9%. However, the Consumer Confidence Index improved by less than anticipated in September, printing at 32.7 against the expected 33.8. At the beginning of the week, the country will release the Jibun Bank Services PMI, foreseen at 45.6 in September.
The daily chart for the USD/JPY pair shows that it has spent the week battling around a bearish 20 DMA, ending it a few pips below it. Technical indicators are directionless within neutral levels. The pair is also trading around the 61.8% retracement of its latest daily decline, while the 38.2% retracement of such slump provides support at 104.85. In the 4-hour chart, the risk is skewed to the downside, as the pair is around a bearish 100 SMA as technical indicators hold within negative levels, without clear directional strength.
Support levels: 105.10 104.85 104.50
Resistance levels: 105.80 106.25 106.60
GBPUSD
The British Pound was among the best performers against the greenback last week, amid hopes the EU and the UK will be able to clinch a post-Brexit trade deal. The GBP/USD pair closed on Friday at 1.2943, not far from a weekly high of 1.2978. However, the ninth round of talks ended Friday without progress. Over the weekend, UK PM Boris Johnson and EU Commission President Ursula von der Leyen met and approved a further month of negotiations after agreeing progress has been made but "significant gaps" remain. Chief negotiators have been instructed to "work intensively" to close such gaps.
Meanwhile, the UK has reported roughly 12,900 new coronavirus cases on Sunday, the biggest one-day increase on record. Restrictions have been imposed in some areas, and fears mount over another full lockdown in the kingdom. This Monday, BOE’s Haldane is due to offer a speech, while Markit will release the final reading of the September Services PMI, foreseen at 60.1 from 55.1 previously.
From a technical point of view and according to the daily chart, the GBP/USD pair has room to extend its advance. It finished the week above all of its moving averages, although the 20 DMA maintains its bearish slope. Technical indicators, in the meantime, hold just above their midlines, lacking directional strength. In the shorter-term and according to the 4-hour chart, the risk is also skewed to the upside, as the pair settled above a bullish 20 SMA, which advances above the 100 SMA. Technical indicators in this last time-frame hold within positive levels, although without clear directional strength.
Support levels: 1.2865 1.2820 1.2770
Resistance levels: 1.2925 1.2985 1.3030
AUDUSD
The AUD/USD pair closed the week with modest gains around 0.7160, flat on Friday. The greenback got to recover some ground at the end of the week amid mounting risk-aversion, this last triggered by coronavirus extending its claws into the White House. The Aussie was quite resilient, considering that, by the end of the week, gold prices and equities edged lower.\
The week starts with a holiday in China and Australia, although this last will unveil some data, starting with the Commonwealth Bank Services PMI, foreseen in September at 50. Later into the session, the country will publish de TD Securities Inflation for the same month, previously at 1.3% YoY.
The daily chart for the AUD/USD pair indicates that the bullish potential is limited. Attempts to advance were limited by selling interest aligned around a bearish 20 DMA, while technical indicators have turned marginally lower within neutral levels. In the 4-hour chart, the pair is a few pips above a bullish 20 SMA, but below the larger ones, as technical indicators hold above their midlines, without directional strength. Bulls would take control of the pair on a clear advance beyond 0.7210, a strong static resistance level.
Support levels: 0.7140 0.7100 0.7060
Resistance levels: 0.7210 0.7250 0.7290
GOLD
Gold ended the week with gains but failed to sustain its move over the $1,900. While the USD index DXY stayed under 94.00 level, Trump’s COVID illness created uncertainty in the markets on Friday. On the other hand, worse than expected NFP reading is also overshadowed by Trump’s condition. Therefore, USD, Gold and US indexes trade will most likely be driven by the president’s condition this week.
Markets in China will stay closed due to the national holiday until Friday. In the US, ISM Services PMI (Sep) will be followed while on Tuesday Powell’s speech will be followed. On Wednesday, all eyes will be on FOMC Minutes.
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 also ended the week with some gains while ending the Friday trade in the negative zone. Precious metal trade was in the mercy of developments about Trump’s test result. President Trump tested positive on Friday and later in the day he was hospitalised for a closer check on. The USD index DXY gained marginal ground on Friday but failed to overcome 94.00 level. Gold to Silver ratio seems to find a balance around 80.00 lately signalling further room for Silver to advance. Apart from the latest pullback, Silver gained 27.60% in Q3 which makes it the leading asset to invest. Over the year, the white metal gained 30.20% reflecting the volatile trade.
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 continued its sharp decline on Friday testing $37.00 as panic triggered by Trump's test results following the debate last Tuesday. In general, as the global supplies are rising and demand is shrinking oil continues to stay under pressure. Apart from Trump testing positive for COVID-19, ongoing uncertainty about the new stimulus package also weighed on the risk sentiment with WTI. Oil rigs in the US rose six to 189 this week, their lowest since the week to June 19, while gas rigs fell by one to 74, according to Baker Hughes data.
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
Wall Street ended the week with marginal gains despite the shocking news hitting the wires as President Trump and first lady Trump both tested positive for COVID-19. Later in the day, a number of Trump’s executives also tested positive and as a precautionary move, Trump hospitalised. However, on Sunday, Dr Sean Conley and several other doctors have been briefing the press and stated the president's condition is improving. Trump has been given another infusion of Remdesivir, with no shortness of breath, and has an oxygen saturation level of 98%. Trump’s doctors also added that if the president’s condition improves, he can be discharged from the hospital on Monday. As there are only four weeks left until elections in the US, Trump’s campaign is paused and also his tax declarations created a wave of discussions and protests on social media. The September non-farm payrolls report was weaker than expected with only 661K jobs created last month, down from 1.371 million. Average hourly earnings growth slowed to 0.1% from 0.3% but the unemployment rate dropped to 7.9% from 8.4%. Despite the worse than expected reading, the USD index DXY remained slightly positive, still below 94.00 level. On the other hand, despite the positive dialogue between House Speaker Pelosi and Treasury Mnuchin, the package will be released most likely after the elections.
This week will be relatively quiet with a couple of key events on the docket. ISM Services PMI (Sep) will be followed while on Tuesday Powell’s speech will be followed. Also on Wednesday, all eyes will be on FOMC Minutes.
From the technical point of view, over the physiological 28,000 level, 28,400 with 29,000 and 29,500 can be followed as next resistance while below 27,770 level the supports can be seen at 27,400, with 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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