Market Talk
– Safe-havens reversed course on Friday, giving up some its gains from earlier this week as markets seemed to take cheer from news of talks between the U.S. and Russia about Ukraine, helping riskier asset higher.
– News late on Thursday that Secretary of State Antony Blinken had accepted an invitation to meet with Russian Foreign Minister Sergei Lavrov late next week’ provided Russia does not invade Ukraine, provided relief and hopes that a diplomatic solution to the tension can be found.
– The dollar rose 0.2% on the yen, and earlier reached as high as 115.27 yen, having touched a two-week low of 114.78 in early Friday trading. The Swiss franc, have gained this week amid high tension on the Ukrainian border, though the dollar gained 0.12% on the franc on Friday.
– The euro continued its week of choppy trading based on Ukraine headlines and was at $1.1365 on Friday, while the pound was at $1.3605 supported by markets betting on more monetary tightening from the Bank of England.
– Gold had rose above $1,900 for the first time since June as investors flocked to the safety of bullion after U.S. President Joe Biden said there was every indication Russia was planning to invade Ukraine. However, news that U.S. and Russia could be holding talks sent bullion lower on Friday morning in Asia.
Chart Focus EUR/JPY
Key Points
1. Sell EUR/JPY recommendation.
2. Sell EUR/JPY at 131.00. Stop at 131.35 and profit target at 130.10
3. Tensions in Europe are likely to weigh on the Euro and aid the yen.
4. Price is likely to be capped by the 20EMA with the MACD and 20EMA, both hinting at a bearish price trend.
Fundamental Comments
1. Tensions on the Russian-Ukraine border are likely to weigh on the Euro.
2. Fear of war on the European front is likely to aid the safe haven yen.
Technical Comments
1. Price is likely to be capped by the 20EMA
2. MACD and 20EMA are both hinting at a bearish price trend.
Key Levels
| Support | 130.70 | 130.35 | 130.00 |
| Resistance | 131.05 | 131.45 | 131.90 |
Technical Overview
USD/JPY – Price reached a high at 115.40 yesterday and our sell entry order at 115.50 was not filled. Price had reached a low of 114.78 overnight and this may be the low. Stochastic is rising after a bullish crossover from the oversold zone. MACD is rising but 20EMA is hinting at a bearish price trend. We think price may have reached a low and a move above the 20EMA at 115.30 would confirm the bottom at 114.78.
| Support | 115.00 | 114.75 | 114.45 |
| Resistance | 115.30 | 115.85 | 116.15 |
EUR/USD – The rally from Monday’s low reached a high of 1.1395 on Thursday. The high was also the Fibonacci 50% correction point of the decline from the high at 1.1491 to the low at 1.1279. As long as price remains below 1.1410, the trend remains bearish with 1.1220 as the target of the decline. Stochastic is declining from overbought zone and MACD has turned bullish. 20EMA is neutral at the moment.
| Support | 1.1350 | 1.1320 | 1.1280 |
| Resistance | 1.1395 | 1.1425 | 1.1460 |
GBP/USD – Price test the upper limit of its recent range at 1.3627 overnight. While price managed to move above 1.3627 to a high of 1.3637, price was unable to hold above the previous high. We saw a decline back into the range. If price is able to hold above 1.3585, we are likely to see another test of the high at 1.3637 in the next 24 hours. MACD and 20EMA remain bullish but Stochastic is into the overbought zone.
| Support | 1.3600 | 1.3565 | 1.3520 |
| Resistance | 1.3640 | 1.3670 | 1.3715 |
XAU/USD – Price move above $1900 overnight to a high of $1902.30. This could the end of the rally and we could be seeing a decline back to $1879.25 or $1844.40 over the next few days. Stochastic is in overbought zone. MACD remains bullish and 20EMA is point higher with a steep slope, hinting at a strong bullish price trend. We favour a correction back to $1879.25.
| Support | 1888.10 | 1879.40 | 1867.70 |
| Resistance | 1902.30 | 1912.55 | 1925.85 |
USD/CAD – We had a sell order at 1.2750 from Tuesday and yesterday we had left stop at 1.2735 and profit order at 1.2665. Price declined to a low of 1.2673 and our position remains opened. Stochastic is near to the oversold zone but MACD and 20EMA remain bearish. Our view remains unchanged and we are looking at a decline in this pair for today. We would recommend keeping orders unchanged for today.
| Support | 1.2670 | 1.2635 | 1.2595 |
| Resistance | 1.2700 | 1.2735 | 1.2775 |