AAFX TRADING

Daily Market Lookup

  • The dollar was up on Friday morning in Asia, rallying from its losses during the previous session. Investors turned to the safe-haven asset after U.S. data said that 1.877 million Americans claimed unemployment during the previous week, higher than the forecasted 1.8 million claims. Investors are now looking to Friday’s non-farm payrolls report, due to be released later in the day. Payrolls are forecast to fall by 8 million. But optimism over a global economic recovery from COVID-19 continues to remain high, with investors expecting further stimulus measures from governments and the expected development of a COVID-19 vaccine to further boost economic recovery. According to Johns Hopkins University data, there are over 6.6 million COVID-19 cases and almost 400,000 deaths globally as of June 5. Meanwhile, Asian risk currencies such as the AUD basked in the aftermath of the European Central Bank on Thursday increasing the size of its Pandemic Emergency Purchase Program (PEPP). The euro held big gains on Friday after the European Central Bank expanded its stimulus more than expected to prop up an economy dealing with its worst recession since World War Two.
  • The euro's gains helped support appetite for riskier currencies in Asia with the Australian dollar holding gains and the Hong Kong dollar higher. The ECB increased its emergency bond purchase scheme by 600 billion euros, more than 500 billion expected by markets, to 1.35 trillion and extended the scheme to mid-2021. Investor confidence in the currency has grown also after Germany last month threw its weight behind the idea of a European Union recovery fund, breaking away from its long-held tradition to resist moves towards fiscal integration in the currency bloc. "Recent actions by both the EU Commission, as well as the ECB have reduced tail risks around the euro area economic outlook," said Zach Pandl, co-head of Global foreign exchange at Goldman Sachs (NYSE:GS) in New York "Europe's main challenge is its incomplete fiscal policy architecture. However, European institutions are making important changes to correct those weaknesses. And those include the ECB’s bond purchases as well as the EU recovery fund proposal, which we think will go a long way towards improving fiscal policy coordination in euro area," he added. Unwinding bets on safe-haven currencies reflected broad optimism in financial markets as easing social distancing restrictions supported economic recovery hopes. The U.S. weekly jobless claims report showed the number of Americans filing for benefits dropped below 2 million last week for the first time since mid-March, even though that is still three times larger than their peak during the global financial crisis. Official U.S. employment data due later on Friday is expected to show nonfarm payrolls fell by 8 million in May after a record 20.537 million plunge in April. The unemployment rate is forecast to rocket to 19.8%, a post-World War Two record, from 14.7% in April. Still investors are betting governments' stimulus around the world and the development of a vaccine for the COVID-19 will help the economy quickly bounce back from those dismal levels. The gains came even amid rising worries about the future of the city after China's move last month to impose national security legislation. ECB will now spend EUR1.35 trillion ($1.521 trillion), up from EUR 750 billion, to mitigate the economic impact of COVID-19. The program has also been extended to at least June 2021, and ECB pledged to reinvest the proceeds until the end of 2022 at the earliest.
  • Oil prices nudged higher on Friday as traders await cues from a meeting that could take place as soon as this weekend where major oil producers will discuss whether to extend record production cuts. Brent has risen about 14% this week, while WTI is up nearly 6%, leaving benchmarks on track for a sixth week of gains. The surge was triggered by the output cuts amid signs of improving fuel demand as countries begin to ease lockdowns they had imposed to prevent the spread of the new coronavirus. The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a grouping known as OPEC+, will meet on Saturday to discuss extending output cuts, Algeria's Ennahar TV channel reported on Friday, citing an OPEC source. Three OPEC+ sources said earlier a ministerial videoconference could be held this week, should Iraq and others agree to boost their adherence to existing supply cuts. Edward Moya, senior market analyst at OANDA, said oil prices are heading for a sixth weekly rise but gains had softened as traders are taking the prospect of Iraq's full commitment to supply cuts "with a grain of salt" Saudi Arabia and Russia, two of the world's biggest oil producers, want to extend output cuts of 9.7 million barrels per day (bpd) into July. The OPEC+ meeting had been expected to take place on June 4, but was delayed amid talk about poor compliance with commitments to cut supply by some producers. If OPEC+ fails to agree to roll over the current output curbs, that would mean the cut could drop back to 7.7 million bpd from July through December as previously agreed. Investors were left disappointed when OPEC+ failed to push up its policy meeting to Thursday, as was widely expected. The organization is struggling over accusations that some of its members failed to stick to the production cuts agreed to in April. But Russia and Saudi Arabia, two of the biggest global oil producers, are leading the movement to extend the cuts, and OPEC could still hold a ministerial video conference on Saturday or Sunday should adherence to the cuts improve.

 

 
Intraday RESISTANCE LEVELS
5th June 2020 R1 R2 R3
GOLD-XAU 1,729-1,740 1,748 1,755-1,765
Silver-XAG 18.00-18.55 18.95 19.60-20.10
Crude Oil 38.00-38.90 39.50 40.10-41.00
EURO/USD 1.1400-1.1450 1.1495 1.1550-1.1600
GBP/USD 1.2720-1.2800 1.2850 1.2870-1.2930
USD/JPY 110.20-111.00 111.80 112.40-113.00

Intraday SUPPORTS LEVELS
5th June 2020 S1 S2 S3
GOLD-XAU 1,700 1,694 1,675-1,664
Silver-XAG 17.60 16.90 16.50-16.10
Crude Oil 37.10-36.60 36.10 35.20-34.00
EURO/USD 1.1350-1.1300 1.1235 1.1190-1.1150
GBP/USD 1.2650-1.2600 1.2550 1.2470-1.2410
USD/JPY 109.40-108.40 107.90 107.10-106.20

Intra-Day Strategy (5th June 2020)
GOLD-XAU Buy on Dips
Silver-XAG Buy on Dips
Crude Oil Neutral to Buy
EUR/USD Neutral to Buy
GBP/USD Neutral to Sell
USD/JPY Neutral to Sell

Gold – XAU

AAFX TRADING

Gold on Thursday made its intraday high of US$1716.14/oz and low of US$1707.31/oz. Gold up 0.264% at US$1708.19/oz.

Technicals in Focus:

In daily charts, prices are above 50DMA (1596) and breakage below will call for 1550. MACD is below zero line but histograms are increasing trend and it will bring upward stance in the upcoming sessions. RSI is in overbought region and more upside is expected before it gets stretched. Stochastic Oscillator is in overbought territory and giving negative crossover to bearish stance for intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above; buy above 1720-1660 with risk below 1660, targeting 1740-1748-1754 and 1765-1772. Sell below 1740-1772 keeping stop loss closing above 1772, targeting 1720-1700-1690 and 1674-1660.

 
Intraday Support Levels
S1     1,700
S2     1,694
S3     1,675-1,664
Intraday Resistance Levels
R1     1,729-1,740
R2     1,748
R3     1,755-1,765

Technical Indicators

Name   Value Action
14DRSI  

52.982

Buy
20-DMA   1717.47 Buy
50-DMA  

1678.93

Buy
100-DMA   1632.40 Buy
200-DMA   1563.70 Buy
STOCH(5,3)   28.621 Sell
MACD(12,26,9)   -2.894 Sell

Silver - XAG

AAFX TRADING

Silver on Thursday made its intraday high of US$17.77/oz and low of US$17.67/oz settled down by 0.0282% at US$17.67/oz.

Technicals in Focus:

On daily charts, silver is sustaining above 100DMA (17.55), breakage below will lead to 17.30. MACD is above zero line and histograms are increasing trend and it will bring bullish stance in the upcoming sessions. RSI is in overbought region, indicating buy signal for now. The Stochastic Oscillator is in overbought region and giving negative crossover to show upside move for the intraday trade.

Trading Strategy: Buy on Dips

Based on the charts and explanations above, buy above 17.60-16.10 targeting 18.00 and 18.40-18.95; stop breakage below 15.00. Sell below 18.55-20.95 with stop loss above 21.00; targeting 18.00-17.60-16.90 and 16.50-16.10-15.60.

 
Intraday  Support Levels
S1     17.60
S2     16.90
S3     16.50-16.10

Intraday  Resistance Levels
R1     18.00-18.55
R2     18.95
R3     19.60-20.10

TECHNICAL INDICATORS
Name   Value Action
14DRSI   75.370 Buy
20-DMA   15.36 Sell
50-DMA   14.88 Sell
100-DMA   16.35 Sell
200-DMA   16.91 Sell
STOCH(5,3)   96.268 Buy
MACD(12,26,9)   -0.374 Buy

Oil - WTI

AAFX TRADING

Crude Oil on Thursday made an intra‐day high of US37.88/bbl, intraday low of US$37.05/bbl and settled up by 1.855% to close at US$37.88/bbl.

Technicals in Focus:

On daily charts, oil is sustaining below its 50DMA i.e. 40.00 which is a resistance level and breakage above will call for 44.00. MACD is below zero line and histograms are in increasing mode will bring bullish stance in the upcoming sessions. The Stochastic Oscillator is in overbought region and giving positive crossover for confirmation of bullish stance; while the RSI is in neutral region and more downside can be expected to reach the oversold region, which is highly probable.

Trading Strategy: Neutral to Buy

Based on the charts and explanations above; buy above 37.10-34.00 with risk daily closing below 34.00 and targeting 37.90 and 38.90-39.50-40.10. Sell in between 37.10-39.70 with stop loss at 40.10; targeting 36.60-36.10-35.20 and 34.00-33.00-32.25.

 
Intraday Support Levels
S1     37.10-36.60
S2     36.10
S3     35.20-34.00

Intraday Resistance Levels
R1     38.00-38.90
R2     39.50
R3     40.10-41.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   64.117 Sell
20-DMA   22.13 Buy
50-DMA   24.89 Sell
100-DMA   38.40 Sell
200-DMA   47.45 Sell
STOCH(5,3)   82.130 Sell
MACD(12,26,9)   -3.0720 Sell

EUR/USD

AAFX TRADING

EUR/USD on Thursday an intraday low of US$1.1194/EUR, high of US$1.1363/EUR and settled the day up by 0.925% to close at US$1.1338/EUR.

Technicals in Focus:

On daily charts, prices are sustaining below 100DMA (1.1031), which become immediate resistance level, break above will target 1.1090. MACD is below zero line but histograms are increasing mode which will bring bullish view. Stochastic is in overbought territory and giving positive crossovers to signal for bullish outlook for intraday. 14D RSI is currently in neutral region and giving no directions to consider right now.

Trading Strategy: Neutral to Buy

Buy above 1.1350-1.1060 with risk below 1.1030, targeting 1.1400-1.1450-1.1495 and 1.1550-1.1600. Sell below 1.1400-1.1600 targeting 1.1350-1.1300-1.1235 and 1.1190-1.1150-1.1060 with stop-loss at daily closing above 1.1600.

 
Intraday Support Levels
S1     1.1350-1.1300
S2     1.1235
S3     1.1190-1.1150

Intraday  Resistance Levels
R1     1.1400-1.1450
R2     1.1495
R3     1.1550-1.1600

TECHNICAL INDICATORS
Name   Value Action
14DRSI   54.032 Buy
20-DMA   1.0851 Buy
50-DMA   1.0897 Buy
100-DMA   1.0970 Sell
200-DMA   1.1015 Sell
STOCH(5,3)   80.758 Buy
MACD(12,26,9)   -0.0047 Buy

GBP/USD

AAFX TRADING

GBP/USD on Thursday made an intra‐day low of US$1.2583/GBP, high of US$1.2664/GBP and settled the day up by 0.412% to close at US$1.2658/GBP.

Technicals in Focus:

On daily charts, prices are sustaining below 200DMA (1.2647) is become major resistance level. 14-D RSI is currently in neutral region and direction is difficult to predict on RSI bases. The Stochastic Oscillator is in oversold territory and giving negative crossover to confirm bearish stance. MACD is above zero line but histograms are increasing lead to upward movement.

Trading Strategy: Neutral to Sell

Based on the charts and explanations above; sell below 1.2650-1.2800 with targets at 1.2600-1.2550-1.2410 and 1.2320-1.2250-1.2165 stop-loss should be 1.2600. Buy above 1.2600-1.2060 with targets 1.2650-1.2700-1.2770 and 1.2800-1.2850-1.2910 with stop loss closing below 1.2800.

 
Intraday Support Levels
S1     1.2650-1.2600
S2     1.2550
S3     1.2470-1.2410

Intraday Resistance Levels
R1     1.2720-1.2800
R2     1.2850
R3     1.2870-1.2930

TECHNICAL INDICATORS
Name   Value Action
14DRSI  

47.554

Buy
20-DMA   1.2308 Buy
50-DMA   1.2270 Sell
100-DMA   1.2600 Sell
200-DMA   1.2650 Sell
STOCH(5,3)   44.940 Sell
MACD(12,26,9)   -0.0305 Sell

USD/JPY

AAFX TRADING

USD/JPY on Thursday made intra‐day low of JPY108.61/USD and made an intraday high of JPY109.20/USD and settled the day up by 0.2295% at JPY109.14/USD.

Technicals in Focus:

In daily charts, JPY is sustaining above 200DMA (108.30), which is initial support on the daily chart. 14-D RSI is currently in overbought region and chances of downward are expected based on RSI. MACD is above zero line but histograms are in decreasing mode which might lead to downward movement. The Stochastic Oscillator is in neutral territory and signaling to sell as it has given negative crossover to confirm bearish stance.

Trading Strategy: Neutral to Sell

Sell below 110.20-113.00 with risk above 113.00 targeting 109.00-108.40-107.90 and 106.90-106.20-105.60. Long positions above 109.40-105.00 with targets of 110.20-110.90 and 111.80-112.50 with stop below 105.00.

 
Intraday Support Levels
S1     109.40-108.40
S2     107.90
S3     107.10-106.20

INTRADAY RESISTANCE LEVELS
R1     110.20-111.00
R2     111.80
R3     112.40-113.00

TECHNICAL INDICATORS
Name   Value Action
14DRSI   47.904 Buy
20-DMA   107.10 Buy
50-DMA   107.55 Sell
100-DMA   108.51 Sell
200-DMA   108.22 Buy
STOCH(9,6)   70.253 Sell
MACD(12,26,9)   -0.161 Sell

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