Daily market analysis

Sep 09,2020

September 10, 2020
   

Daily Market Analysis

Market Focus

After the holiday, the U.S. market plunged heavily. The Nasdaq fell as much as more than 4%, and it is down nearly 10% within three days; major technology companies tumbled as much as 15%, such as Tesla Inc. and Apple Inc. The sell off in risky assets has been concentrated on tech shares and momentum stocks, while credit has been more resilient. The huge sell off was caused by the speculative fever that drove previous bullish bets in options markets. As of now, investors are seeking for the safety of haven assets, which pushes Treasury yields lower and the dollar stronger as more demand in the greenback.

Oil price plummeted on Tuesday with the Brent oil slid to $40 a barrel, which is due to the concern of oil demand recovery is faltering. The situation of Covid-19 is still the biggest consideration, raising concerns about the short- term demand outlook. Today’s downward prices in oil potentially imply that investors worry about the future of oil demand and not just plays a bearish- bullish trading game.

 

Market Wrap

Main Pairs Movement

The dollar index extends the strength further north of the 93.5 mark. With the major sell off in stocks and oil, investors are now back to seek for the safety of haven assets, the dollar, resulting in a lower rate in the U.S. Treasury yields and a stronger dollar. The dollar can possibly advance to weekly tops over 93.5 and August high over 94.0.

EUR/USD extends the slide below 1.1800 today. The pair faces the pressure as the dollar boosts. Besides, potential movement of EUR/USD is also driven by the European Central Bank (ECB) meeting. According to the Eurostat, overall euro area economy contracts  14.7% on a yearly basis in Q2; despite of performing slightly better than the expectation, 15%, the data fail to help the euro dollar find demand, thus performing weaker against the dollar today.

 

COVID-19 Data (EOD):

 

Technical Analysis:

EURUSD(H4)

EUR/USD extends its downward trend from last week. As of writing, the pair is trading at 1.1785 during American session. In the 4- hour chart, the pair merely broke through the support level at 1.1786, and slightly bounced back later. Nonetheless from the technical perspective, it is expected to see the euro dollar continupusly behave weaker against the dollar because of the signals from both MACD histogram and Bollinger Band. MACD histogram seems to still too flat, implying that selling is not over yet; Bollinger Band suggests that the pair is still trading along with the lower band, showing no sign of an upward tendency.

Resistance: 1.1881, 1.1836, 1.1786

Support: 1.1753, 1.1740

 

GBPUSD(H4)

GBP/USD continues the bearish momentum from last week, currently trading at 1.2995 during American session. In the 4- hour chart, although both MACD and RSI indicators suggest that the pair is anticipated to bounce back modestly, it continues to head south, currently heading to challenge its support at 1.2976. The trend seems to exacerbate the ongoing slump along with the uncertainties of British economy and Brexit. Thus. It is expected to see the pair staying in short positions along with the range from 1.3061 to 1.2976 until it bounces back from 1.2976.

Resistance: 1.3256, 1.3166, 1.3061

Support: 1.2976, 1.2884

 

GOLD(H4)

As of writing, gold is trading at $1931.85 during American session. Gold bounces back from last week’s bearish, heading to test its resistance at $1941.85. From the technical viewpoint, gold is expected to keep up its bullish momentum until it surpasses the upper band in Bollinger Band; neutral RSI and flat MACD histogram both suggest that gold’s upward momentum is not over yet.

Resistance: 1959.21, 1950.78, 1941.85

Support: 1924.09, 1911.17

 

Economic Data