Daily market analysis

JUL 14,2020

July 14, 2020

Daily Market Analysis

Market Focus

US stocks declined after the S&P 500 briefly touched the highest level since the coronavirus pandemic sent markets tumbling worldwide in March. Major US equity index suddenly stumbled during late US session on signs that the virus was constantly breaking record high.

President Donald Trump on Monday criticized health experts’ guidelines for schools reopening were too tough, impractical, and expensive. On the other hand, Fauci on Monday said the surge in coronavirus cases to the country’s failure to shut down completely, then a rush to reopen too soon, and urged a commitment to guidelines to rub out the disease.

China announced sanctions against US officials including Senators Marco Rubio and Ted Cruz, in a largely symbolic retaliation over legislation intended to punish Beijing for its treatment of ethnic minorities in the XinJiang region. The moves come three days after the US sanctioned a top member of China’s ruling Communist Part and three other officials over alleged human rights abuses in XinJiang.

Market Wrap

Main Pairs Movement

The dollar weakened against most of its G-10 peers for most of the day, but momentum quickly took a U-turn near the end of US trading session. Euro-Dollar surged 0.4% as German economy ministry, Peter Altmaier, said that the country is in the process of recovering and that the low point has passed, and commercial relationship with China remains stable, despite the controversy around the Hong-Kong law.

The safe-haven Yen gained upper hand against the greenback as China announced sanctions against US officials, it is up 0.35% on Monday.  The announcement further escalates geopolitical tension between China and US, thus benefited the Yen. US 10-year treasury yield fell 7% as of writing.

Sterling’s resilience against the US dollar has vanished on Monday. The downside move might come from bidder’s profit-taking and escaping from mounting uncertainties as both parties are heading to Brussels this week. Cable dropped 0.53% intraday.

COVID-19 Data (EOD):

Technical Analysis:

 EURUSD (H4)

Sterling took a hit on Monday, retreated to 1.256. Price was once again blocked by 1.2662 resistance and created a double-top on the four-hour chart. It breached 61.8% Fibonacci at 1.2587 and is dropping toward previous low of 1.2526. If 1.2526 fails to withstand Bear’s attack, it could open doors to tremendous downside loss. MACD’s enlarging negative bars also pointed to a continuation of downward momentum.

 

Resistance: 1.2587, 1.2662, 1.2784

Support: 1.2526, 1.2466, 1.2391

 

USDJPY (H4)

USDJPY was traded below the 107.29-107.36 resistance band, which previously acted as strong support, and now turned into a stern resistance. The descending trendline is still valid on the four-hour chart, thus an immediate upside breakout is likely to be restricted. That being said, downward near support at 107.1 will be tested within a short period.

 

Resistance: 107.29 – 107.36, 107.96, 108.55

Support: 107.1, 106.75, 106.4

 

XAUUSD (H4)

Gold continued to zig-zag its way up towards $1836, and was placed well within the ascending tunnel. Price was traded slightly above $1802 near the end of day trading, and $1800 is gradually attracting plenty of long stop entry as speculators are gaining confidence of the recent rally. That being said, price could receive a decent boost if it retreated to test $1800 and triggers these pending orders.

 

Resistance: 1818, 1836

Support: 1786, 1761, 1721

 

Economic Data

Currency Data Time (TP) Forecast

GBP

Claimant Count Change (June) 14:00

400K

GBP

GDP 14:00

NA

GBP

Manufacturing Production (May) 14:00

8%

EUR

German ZEW Economic Sentiment (July) 17:00

60

USD

Core CPI (June) 20:30

0.1%