Market Talk
– The safe-haven yen hit a near three-week high against the U.S. dollar while the euro and riskier currencies like the Australian dollar and kiwi dollar, fell on Tuesday following a series of developments in the Ukraine-Russia crisis put investors on edge.
– Russian President Vladimir Putin recognized two breakaway regions of eastern Ukraine as independent on Monday, ordering the Russian Army to deploy troops to the area. It was not immediately clear whether this action was the start of an invasion of Ukraine.
– The euro dipped to a one-week low of $1.1297. The risk-sensitive Australian and New Zealand dollars traded under pressure. The Australian dollar was last down at $0.7182 while the kiwi was at $0.6710.
– The yen edged about 0.2% higher to 114.50 to the dollar early in the Asia session. The Swiss franc, another safe-haven, hit a one-month high overnight at $0.9149.
– Gold was up on Tuesday morning in Asia. Investors turn to the safe-haven yellow metal as Russia and Ukraine tension escalates. Russia recognized two breakaway regions of eastern Ukraine and ordered troops into the regions escalating fear of war in the region.
Chart Focus USD/CAD
Key Points
1. Sell USD/CAD recommendation.
2. Sell USD/CAD at 1.2760. Stop at 1.2795 and profit target at 1.2660.
3. High crude oil price and interest rate differential are in the Canadian dollar’s favour.
4. Price is near to the upper end of a 3-week range and momentum indicators are hinting at a price decline.
Fundamental Comments
1. Crude oil price at a 7-year high is likely aid the Canadian dollar.
2. Interest rate differential is in the Canadian dollar’s favour.
Technical Comments
1. Price is near to the upper end of a 3-week range.
2. Stochastic and MACD are both hinting at a bearish price trend.
Key Levels
| Support | 1.2720 | 1.2690 | 1.2650 |
| Resistance | 1.2765 | 1.2795 | 1.2835 |
Technical Overview
USD/JPY – Price declined to low of 114.49 and both Stochastic and MACD are hinting at a possible price low with divergence. The decline to 114.49, measured from 115.87, is also equal to the decline from 116.33 to 115.00. This is another sign of a possible completion of the correction. However, 20EMA remains bearish and is hinting at a price decline. Tension on the Ukraine-Russia area is hinting of a stronger yen.
| Support | 114.50 | 114.10 | 113.75 |
| Resistance | 114.85 | 115.15 | 115.55 |
EUR/USD – Price reached a high of 1.1389 yesterday and our order at 1.1370 was filled. Price had declined to a low of 1.1287 this morning, which was just above our profit order at 1.1285. We remain bearish and for today, we would recommend lowering stop to 1.1335 and profit target lower to 1.1265. Stochastic is still pointing down and MACD remains bearish. 20EMA is also hinting at a bearish price trend.
| Support | 1.1280 | 1.1240 | 1.1200 |
| Resistance | 1.1320 | 1.1360 | 1.1395 |
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 while Stochastic is hinting at a price decline. 20EMA is neutral at the moment. A price move below 1.3570 will target the next support level at 1.3490.
| Support | 1.3565 | 1.3525 | 1.3490 |
| Resistance | 1.3600 | 1.3640 | 1.3670 |
XAU/USD – We were looking for a decline to $1879 yesterday but instead, price went up to $1913.83 this morning. MACD and Stochastic are warning with a divergence of a possible price high in the making. Stochastic is also in the overbought zone but 20EMA is pointing up with a steep slope, which is a hint of a strong bullish price trend. Price is likely to stay bullish with Ukraine-Russia conflict in focus.
| Support | 1900.95 | 1886.50 | 1875.30 |
| Resistance | 1913.85 | 1930.35 | 1939.90 |
USD/CHF – Price reached an overnight low of 0.9149 and we have seen a pullback from the low to the current level at 0.9160. 20EMA is currently capping the rally at 0.9170. MACD is bearish and is hinting at a price decline. 20EMA is bearish and capping price. We think price is likely to see another decline to test the overnight low at 0.9149 and likely to 0.9125 in the next 24 hours.
| Support | 0.9150 | 0.9120 | 0.9090 |
| Resistance | 0.9180 | 0.9215 | 0.9260 |