JUL 22,2020

   

Daily Market Analysis

Market Focus

U.S. stocks are push higher after the Congress is negotiating a new stimulus plan, and most importantly European Union leaders have agreed to support the virus- damaged regions. Along with the financial supports, the U.S. market is added to its highest since February 2020, with positive vaccine news. Several major companies’, including Microsoft, Blackstone, and Intel, quarterly earnings reports are due soon, and the U.S. jobless claims report is set to release this week; the information will play an important role to drive the U.S. market.

European Union has finalized an unprecedented $858 billion recovery fund in order to rebuild EU economies. As EU agrees on the huge recovery package, European stocks and major Indexes surge significantly. Along with the recovery plan, the positive news on Covid-19 vaccine have boosted investors confidence. European markets rise in reaction; especially, Germany’s DAX index is up 1.7% and European equities have outperformed the rest of the global market.

After UK suspended Hong Kong extradition deal, China implies that it will fight back as an accusation, interfering in Chinese internal affairs. In responding to Chinese accusation, UK and US are in the discussion of forming a coalition to resist China. Besides the tension between UK and China, the positive news on a coronavirus vaccine developed by the University of Oxford have boosted the hope on dealing with Covid-19; the findings are promising, but it is still too soon to say.

 

Market Wrap

Main Pairs Movement

 

The dollar is confronting the threat as EU recovery plan is determined. The safe-haven greenback continues to struggle as it is facing the questions about its status of being a primary reserve currency. In the meanwhile, the US dollar index is under downward pressure among the risk complex, testing the yearly low near 94.60.

The euro climbs to its highest against other currencies after EU finalizes an agreement on an unprecedent stimulus plan. An upturn momentum in sentiment following the stimulus plan and positive news on Covid-19 vaccine boosts up the euro dollar and European markets.

COVID-19 Data (EOD):

Technical Analysis:

 

EURUSD (H4)

The EUR/USD is traded as high as 1.1540 during the U.S. session. The RSI indicator in 4 hours chart shows that the pair seems to be overbought, but it is still push up by the strong upward momentum of the euro dollar. The pair has broken its first resistance at 1.15, and now it is aiming to break its second resistance at 1.1570. The pair seems to hold strong above the support level at 1.1421 since it has tested the support three times. As a risk sentiment currency, the euro should benefit from future positive vaccine news.

 

Resistance: 1.1531, 1.1570, 1.1608

Support: 1.1368, 1.1421, 1.1457

GBPUSD (H4)

The GBP/USD is traded as high as 1.2768 as of writing during the U.S. session. In 4-hours chart, the pair seems to be in a bullish mode as the pair continues to surge above the 20 SMA. The RSI indicator indicates that even though the pair seems to be overbought, it consolidates around 69.8502. The support at 1.2604 acts as a strong area since the pair has tested the area 4 times in July. The pair is currently reaching its resistance at 1.2744; it should be able to break its first resistance and examines its second resistance level at 1.2787 in the future as the news came after the coalition between the U.S. and UK against Chinese threat.

 

Resistance: 1.2744, 1.2787, 1.2851

Support: 1.2545, 1.2604, 1.2653

XAUUSD (H4)

XAU/USD surges to nine- year high level at 1843.47 on Tuesday. As the safe- haven greenback is weak, XAU/USD is boosted. The support level at 1796.30 acts as a strong level since XAU/USD has tested the level 3 times. As new wave of virus infections and raises global concern, gold seems to remain strong. Currently, gold just surpasses its first resistance level at 1840.04, now heading to its second resistance level at 1850.76. Bullish gold seems to have no obstacles en- route to $1850.76 if the situation of the pandemics does not improve.

 

Resistance: 1840.04, 1850.76

Support: 1796.30, 1815.17

Economic Data

Currency Data Time (TP)

Forecast

AUD

NAB Quarterly Business Confidence 09:30  

USD

Initial Jobless Claims 20:30

1300K

ZAR Interest Rate Decision (July) 21:00

3.50%

ZAR

Prime Rate 21:00

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