Market Talk
– The U.S. dollar was down on Monday morning in Asia, after the office of French President Emmanuel Macron said U.S. President Joe Biden and Russian President Vladimir Putin have agreed in principle to hold a summit on the Ukraine crisis, though such a meeting would be impossible if Russia invaded Ukraine.
– The euro traded 0.12% higher at $1.1334, after falling earlier in the session in reaction to Sunday’s announcement from the Belarusian defence ministry that Russia would extend military drills in Belarus. News of Biden and Putin meeting help to support the euro.
– The safe-haven Japanese yen fell slightly against the dollar, pulling back after recent gains following a series of developments in the Ukraine-Russia crisis put investors on edge. The Swiss franc also benefited from investors’ risk aversion due to the tension in Eastern Europe.
– The pound was drifting somewhat at $1.3600 in the middle of its recent range, given some support by expectations of another rate hike at the Bank of England’s March meeting, though weighed down by Ukraine tensions.
– Gold retreated slightly from the key $1,900-per-ounce level as hopes for U.S.-Russia talks brought some calm to wider markets, but lingering concerns over Ukraine help to limit the yellow metal’s loss.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation.
2. Sell EUR/USD at 1.1370. Stop at 1.1405 and profit target at 1.1285
3. Tension in Eastern Europe and a potential US rate hike are both likely to aid the US dollar.
4. Price is capped by a strong resistance with Stochastic hinting at a price decline.
Fundamental Comments
1. Tension in Eastern Europe is likely to weigh on the Euro.
2. A potential interest rate hike from the U.S. Federal Reserve in March is likely to aid the US dollar.
Technical Comments
1. Price is capped by the 20EMA line as well as the Fibonacci 38% correction point.
2. Stochastic is declining and hinting at a price decline ahead.
Key Levels
| Support | 1.1335 | 1.1300 | 1.1280 |
| Resistance | 1.1370 | 1.1395 | 1.1425 |
Technical Overview
USD/JPY – Price failed to move above the 20EMA at 115.30 last Friday and we think price is now likely to test the low at 114.78 again in the next 24 hours. Stochastic has a bearish crossover and is hinting of a price decline. MACD remains bearish and is hinting at a bearish price trend. 20EMA is also hinting at a bearish price trend. A break of 114.78 could lead to a decline to 114.15 over the next few days.
| Support | 114.75 | 114.45 | 114.15 |
| Resistance | 115.15 | 115.55 | 115.85 |
EUR/JPY – We had a sell order on Friday at 131.00 which was filled when price reached a high of 131.11. Price declined to a low of 129.96 on Friday night and our profit order at 130.10 was filled. We made 90 pips on this trade. MACD is hinting that price could have hit a low and a bounce higher is likely. Stochastic is also hinting of a possible price rally given its low reading. However, 20EMA remains bearish.
| Support | 130.40 | 129.95 | 129.60 |
| Resistance | 130.80 | 131.15 | 131.55 |
GBP/USD – Price tested the high of 1.3627 twice on Thursday and Friday, reaching higher high but failed to hold above 1.3627 on both occasions. However, the decline had managed to hold above the 20EMA and we are likely to see another test of the previous high again in the next 24 hours. MACD remains bullish and Stochastic is hinting at a price advance. 20EMA is also hinting at a bullish price trend.
| Support | 1.3600 | 1.3570 | 1.3520 |
| Resistance | 1.3640 | 1.3670 | 1.3715 |
XAU/USD – Price move to a high of $1908.05 but this could the end of the rally and we could be seeing a decline back to $1879.35 over the next few days. Stochastic is warning with a divergence of a possible price high. However MACD remains bullish and 20EMA is also bullish and hinting at a strong bullish price trend. We favour a correction back to $1879.25.
| Support | 1886.50 | 1877.00 | 1867.70 |
| Resistance | 1899.15 | 1908.05 | 1916.45 |
USD/CAD – We had a short position at 1.2750 from Tuesday and last Friday we had left stop at 1.2735 and profit order at 1.2665. Our stop at 1.2735 was triggered and we lost 15 pips on this trade. Price has declined below the 20EMA but MACD remains bullish and is hinting at a bullish price trend. Stochastic is declining in line with the 20EMA. We think price is likely to test the previous high of 1.2760 again over the next 24 hours.
| Support | 1.2720 | 1.2695 | 1.2635 |
| Resistance | 1.2760 | 1.2795 | 1.2835 |