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EURUSD
Speculative interest kept selling the greenback this Wednesday, amid reports of progress in a US stimulus package. Following talks late on Tuesday, House Speaker Nancy Pelosi and US Treasury Secretary Steven Mnuchin sounded confident over clinching a deal, and announced they would continue talks. On a down note, it seems unlikely that a large bill will pass the Republican Senate. The EUR/USD pair traded as high as 1.1880 and holds nearby as the US session comes to an end. Stocks, however, remained under pressure. European indexes closed with substantial losses, dragging Wall Street lower.
Meanwhile, the number of new coronavirus cases in Europe kept recording fresh highs, although the market seems to be ignoring the issue. The macroeconomic calendar didn’t have relevant figures to offer but will become more interesting this Thursday. The EU will publish the preliminary estimate of October Consumer Confidence, foreseen at -15 from -13.9 previously. The US, on the other hand, will release Initial Jobless Claims for the week ended October 16, and September Existing Home Sales.
The EUR/USD pair is holding near its monthly high, overbought but bullish in the near-term. The 4-hour chart shows that it has been developing above all of its moving averages, with the 20 SMA heading north above the larger ones. Technical indicators, in the meantime, stand within overbought readings, partially losing their bullish strength. Overall, the risk remains skewed to the upside, with room for additional gains once above 1.1915, now the immediate resistance level.
Support levels: 1.1830 1.1780 1.1740
Resistance levels: 1.1915 1.1950 1.1990
USDJPY
The USD/JPY pair plunged to 104.33, a fresh October low, as a dollar’s sell-off coupled with the sour tone of equities. European indexes closed in the red, while US ones managed to post some modest intraday gains amid prevalent hopes for an agreement on stimulus within the American Congress. US Treasury yields edged higher at the beginning of the day but ended the day unchanged. Anyway, the dollar remained under pressure, and the USD/JPY pair was able to bounce just modestly from the mentioned low to settle around 104.50.
The Japanese macroeconomic calendar has been quite scarce ever since the week started. This Thursday, the country will publish the All Industry Activity Index for August, previously at 1.3%.
The USD/JPY pair maintains its bearish stance heading into the Asian session, and there’s room for a steeper decline, particularly if the pair loses the 104.00 level. The 4-hour chart shows that it is developing well below all of its moving averages, with the 20 SMA accelerating south below the larger ones. Technical indicators have stabilized within oversold levels, without signs of bearish exhaustion.
Support levels: 104.30 103.95 103.50
Resistance levels: 104.65 105.00 105.40
GBPUSD
The GBP/USD pair soared amid news indicating that the UK and the EU will resume trade talks. The pair traded as high as 1.3176, now trading around 1.3160. Both countries agreed to resume formal talks, aiming to reach a deal by mid-November. Nevertheless, significant gaps remain in the most sticky points, and the chances of a deal are slim. Additionally, the UK reported September inflation data. The annual CPI came in as expected at 0.5%, while core annual inflation was confirmed at 1.3%. Producer Prices remained depressed, but rose 0.2% YoY, beating expectations of 0.1%.
This Thursday, the focus will be on the BOE, as several members will offer speeches, including Governor Andrew Bailey, who is due to speak at the annual Waterline Summit. Also, the UK will publish the CBI Industrial Trends Survey on Orders, foreseen in October at -45% from -48% in the previous month.
The GBP/USD pair is technically bullish in the near-term. The 4-hour chart shows that it’s trading roughly 200 pips above all of its moving averages, with the 20 SMA advancing above the larger ones. Technical indicators have turned flat but within overbought readings, indicating that buyers are still in control.
Support levels: 1.3125 1.3080 1.3030
Resistance levels: 1.3190 1.3240 1.3285
AUDUSD
The AUD/USD pair changed course on Wednesday, trimming its weekly losses and finishing the day with substantial gains near a daily high of 0.7136. The pair was initially underpinned by optimism about a US stimulus package, which put the greenback in sell-off mode. The market ignored mixed Australian data, as the September Westpac Leading Index came in at 0.22%, down from 0.49% in the previous month, while Retail Sales fell by 15% in September, according to preliminary estimates.
During US trading hours, the pair further advanced as Wall Street managed to post modest intraday gains. During the upcoming Asian session, RBA’s Debelle is scheduled to speak, while the National Australian Bank will publish Q3 Business Confidence, previously at -15.
The AUD/USD pair is consolidating gains in the 0.7120 region. The 4-hour chart shows that the pair has regained ground, but further gains are not yet clear, as it managed to advance above its 20 SMA, but remains below the larger ones. Technical indicators crossed their midlines into positive levels, but are already turning lower, with the Momentum within neutral levels. A strong static resistance level comes at 0.7170, and a break above it would make the bullish case clearer.
Support levels: 0.7110 0.7065 0.7020
Resistance levels: 0.7135 0.7170 0.7210
GOLD
With the renewed risk appetite seen on the markets, the USD index DXY continued its decline through sub-93.00 levels and Gold tested $1,930 level before retracing back to $1,920. Also, the US 10-year yield kept its steady incline and hit 0.81%. In its third consecutive day of move-up, Gold tested its resistance level seen on October 12th as the markets are pricing a possible deal on the stimulus package. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin are set to speak once again, trying to seal a deal ahead of the November 3 elections. Senate Republicans seem reluctant to support a large bill at this point. On the other hand, most of the European countries are forced to re-impose some of the lockdown measures with a record number of new cases. However, markets tend to ignore the risk factors of a possible second wave.
If Gold tests $1,950, the targets upside can be followed at $1,980, $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 continued to outperform Gold as the white metal kept its move-up in its third consecutive day. Markets at the moment are pricing a possible deal on the stimulus package either before or after the election. The risk appetite is supported by this expectation and the USD index DXY is pressured with positive sentiment. Precious metals are supported by this optimism while Silver tested the physiological level at $25.00. Silver became the best performer in 2020 so far with almost 40% gains since the start of the year. Falling interest rates around the globe made government bonds less attractive, therefore, the money flow to precious metals increased.
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 failed with its move-up and tested $40.00 on Wednesday despite the decline seen in the USD index DXY. The API reported a nearly 600K weekly build in US crude oil supplies late on Tuesday vs. a forecasted drop of almost 2M barrels. The unexpected stock build-up pressured WTI while concerns on the global oil supply remain as there is still uncertainty on the further production cuts from OPEC+. On the other hand, the rising number of new cases especially in Europe is depressing oil investors for a decline in demand due to re-imposed lockdown measures.
If WTI manages to hold over $40.56 ($65.62-$0.00 61.80%) level, the targets 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
The US indexes failed to sustain their positive mood on Wednesday turned negative right before the closing bell. The US President Donald Trump raised hopes for a stimulus breakthrough and said that he was willing to accept a larger aid bill. White House chief of staff Mark Meadows added to the optimism and said that House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have made good progress on stimulus talks. The USD index DXY slid sub-93.00 levels with the improved risk appetite while precious metals and the US 10-year yield kept their move-up. On the other hand, according to the Beige Book, Economic activity has continued to improve in all of the Federal Reserve districts in recent weeks as the US recovers from the impacts of the ongoing coronavirus crisis, the gains varied by sector, according to the central bank's Beige Book released on Wednesday. Apart from the stimulus talks deadlock, in the light of the elections in the US President Trump is narrowing the deficit with a small margin due to the latest polls. The election period will most likely create extreme volatility as the results might not be clear for an extended time due to the mail voting system.
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
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