Daily Market Report - 10th Nov 2020

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EURUSD

US stocks soared to new all-time highs, and the greenback rallied in the American session as risk-appetite took over. All sectors rallied, led by Pfizer, as the US pharmaceuticals alongside German biotech firm BioNTech announced their COVID-19 vaccine is more than 90% effective in preventing coronavirus. Financial markets were already in a risk-on mood, as the US media called Joe Biden the presidential rally winner over the weekend. The EUR/USD pair topped at 1.1919 to plunge to 1.1794, now trading around the 1.1800 level.

 A vaccine will likely mean the end of lockdowns and restrictions, and hence, a sharp economic comeback. However, it will take up to the second half of next year for the vaccine or vaccines to reach enough people to grant a more normal return to activities. Nevertheless, optimism will prevail.

It’s a light week in terms of macroeconomic data. This Monday, Germany published its September Trade Balance, which posted a surplus of €17.8 billion, missing the market’s expectations. The EU Sentix Investor Confidence index resulted in -10, worse than the previous -8.3, although better than the -15 expected. On Tuesday, Germany will publish the German ZEW Survey on Economic sentiment, expected to have deteriorated in the country in November, but improve for the EU.

The EUR/USD pair found support at the 38.2% retracement from its latest bullish run, measured from 1.1602 to the mentioned daily high of 1.1919. The 4-hour chart shows that the pair is currently struggling around a bullish 20 SMA, which maintains its upward slope above the larger ones. Technical indicators in the mentioned time-frame turned sharply lower, from overbought to neutral levels, still holding within positive levels. The immediate support level is 1.1790, with further declines expected on a break below it.

Support levels: 1.1790 1.1750 1.1710

Resistance levels: 1.1845 1.1880 1.1920 

USDJPY

The USD/JPY pair jumped from a daily low of 103.18 to a daily high of 105.64, its largest one day advance since last March. Demand for the greenback returned in a risk-on scenario, with government bonds plummeting and yields surging to multi-month highs. The yield on the 10-year Treasury note hit an intraday high of 0.98%, holding on to most of its intraday gains as the American session came to an end. The catalyst was Pfizer pharmaceutical reporting that its coronavirus vaccine has more than 90% effectiveness in preventing COVID-19, while no serious safety concerns have been observed.

Japanese data released at the beginning of the day was encouraging, as the preliminary estimate of the September Leading Economic Index came in at 92.9 from 88.5, while the Coincident Index for the same period improved from 79.4 to 80.8. The central bank will publish its September Trade Balance this Tuesday, and the Eco Watched Survey on the current economic situation, seen recovering in October to 57.6 from 49.3 in September.

The pair trades around 105.50 at the time of writing, maintaining its bullish potential in the near-term. The 4-hour chart shows that it has crossed above all of its moving averages, although with the 20 SMA slowly turning north well below the larger ones. Technical indicators reached overbought levels, the Momentum still advancing, and the RSI stable above 70. A daily descendant trend line coming from March high comes around 105.00 this Tuesday, providing critical resistance, with further gains expected on a break above it.

Support levels: 105.30 104.90 104.50

Resistance levels: 105.65 106.00 106.40

GBPUSD

The GBP/USD pair is ending the first day of the week unchanged around 1.3150, after reaching a fresh two-month high of 1.3207. The British Pound found eased as speculative interest rushed into the greenback on positive coronavirus vaccine news, but its slump was limited by encouraging Brexit headlines. UK Finance Minister Rishi Sunak said that significant progress was made in Brexit talks while announcing a plan to provide stability to the financial sector in the post-Brexit era. Meanwhile, EU's chief Brexit negotiator Michel Barnier said they are redoubling their efforts to reach an agreement on the future EU-UK partnership.

The UK calendar had nothing to offer on Monday, but this Tuesday, the kingdom will publish its October employment figures. The ILO unemployment rate is foreseen rising to 4.8% from 4.5%, while the Claimant Count Change is seen at 36K from 28K in September. Ahead of the monthly employment report, the country will see the release of the BRC Like-For-Like Retail Sales, expected to have increased by 8.4%YoY in October.

The GBP/USD pair held above 1.3100, with approaches to the level attracting buyers. The 4-hour chart shows that the pair remains above a firmly bullish 20 SMA, which continues advancing above the larger ones. The Momentum indicator has eased from daily highs, but is still within positive levels, while the RSI indicator stabilized around 57, indicating limited selling interest at the time being.

Support levels: 1.3110 1.3065 1.3020

Resistance levels: 1.3185 1.3230 1.3290

AUDUSD

The AUD/USD pair peaked at 0.7339 this Monday, its highest since mid-September, but gave up on resurgent USD demand, ending the day at around 0.7290, little changed from Friday’s close. The Australian currency rallied alongside equities, boosted by news indicating encouraging progress in the Pfizer coronavirus vaccine. The macroeconomic calendar had nothing to offer on Monday, but Australia will publish this Tuesday the NAB’s Business Confidence index for October, previously at -4, and NAB’s Business Conditions for the same month, previously at 0. Also, China will publish October inflation data.

The AUD/USD pair maintains a positive stance in the near-term, despite its modest intraday advance. The 4-hour chart shows that it held above a bullish 20 SMA, currently at around 0.7250. The 100 SMA is finally showing signs of life, posting a modest advance far below the current level. Technical indicators have retreated sharply from their daily highs but hold within positive territory, with the RSI now consolidating around 60. Bears will have better chances if the pair extends its slide below 0.7220.

Support levels: 0.7220 0.7170 0.7115

Resistance levels: 0.7300 0.7345 0.7390

GOLD

Gold had a massive collapse on Monday as Pfizer and BioNTech stated that the vaccine is 90% effective in preventing infections and has no safety issues after conducting a 43,500-strong Phase 3 trial. As the US election results mostly resolved, markets immediately switched back to pandemic dynamics which ended up Gold being traded as a risk hedge. Therefore, the positive development regarding the vaccine triggered an increase in the risk appetite sending the US indexes to record highs while pressuring the yellow metal. Gold sank from its highest level since late September at $1,965 to a whopping $1,850 before finding balance around $1,865 by the end of the US session. The USD index also gained ground despite a bigger than expected stimulus deal as a result of the Democrat win in the US. Markets are facing a transaction phase between the US election trading to pandemic trading at the moment. Therefore, Gold is expected to stay under pressure in case more positive developments happen regarding the vaccine. On the contrary, expected extreme liquidity caused by the stimulus deal might pressure the USD and support Gold once again.       

Below the $1,860 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 stayed under pressure on Monday as positive developments about the coronavirus pandemic hit the wires. However, the Gold to Silver ratio managed to keep its level around 77.00. Pfizer and its German partner BioNTech announced that their experimental COVID-19 vaccine is more than 90% effective with minimal side effects passing through stage 3. Markets immediately switched back to pandemic trading dynamics as the US election result was resolved. Precious metals stayed under heavy selling pressure while risk instruments like US indexes rallied through their all-time highs. 

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 benefitted the positive news regarding the Covid-19 vaccine and rallied over $41.00 before finding balance at $40.00. Pfizer and its German partner BioNTech said that their experimental vaccine is more than 90% effective in preventing COVID-19. This was seen as a major victory in the fight against the highly contagious disease and lifted fears of a decline in energy demand. As a result, WTI found solid support with the improved risk appetite. On the other hand, markets ignored Keisuke Sadamori, the International Energy Administration (IEA) Director for Energy Markets and Security comments as he expects 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 target's 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

Dow Jones started the week with a massive bullish gap in the light of news regarding the coronavirus vaccine trial results. Pfizer and its German partner BioNTech announced that they managed to get a 90% success rate in preventing infections with minimal side effects which qualifies their vaccine ready with 43,500-strong Phase 3 trials. The positive news hit the markets hard as Dow Jones and other indexes in the US hit their all-time high during the day before retracing to 29,500 zones. The USD index DXY also gained ground while precious metals faced a meltdown. Also, the US 10-year yield rallied through 0.956 in the light of the developments. President Trump’s campaign filed lawsuits demanding a recount for Nevada and Pennsylvania as the Democrats won those states with a tiny margin. Also, President Donald Trump said he fired his Secretary of Defense Mark Esper on Monday as the secretary was against sending military troops against possible civil riots.

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

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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