FX Commentary – Safe Havens Lifted By Russian Invasion of Ukraine

Market Talk

– The U.S. dollar and safe havens rose as Ukraine said Moscow had launched a full-scale invasion. The latest developments in the Ukrainian crisis dented investor appetite for risk, as a sell-off in the equity market helped give safe haven a lift.

– Treasury yields rose as the West unveiled more sanctions against Russia over its move into eastern Ukraine, but bond investors remained mainly concerned about inflation and a potential Federal Reserve rate hike.

– The euro sank to a three-week low against the safe-haven dollar on Thursday. The euro fell as much as 0.35% to $1.1265, the lowest level since Feb. 3. Sterling slipped as much as 0.17% to $1.3522, the lowest since Feb. 15.

– Riskier commodity-linked currencies like the Australian dollar weakened amid intensifying fears that a full-scale Russian invasion of Ukraine was imminent. The Australian dollar dropped as much as 0.62% to $0.7187 and the New Zealand dollar slid as much as 0.64% to $0.6730.

– Gold was up on Thursday morning in Asia, hitting a high of $1949, a near nine-month high. Investors turned towards safe-haven assets after Russian troops landed in Ukrainian cities on the Black Sea and Ukraine said Moscow had launched a full-scale invasion.

Chart Focus USD/CNH

Key Points

1. Buy USD/CNH recommendation.

2. Buy USD/CNH at 6.3130. Stop at 6.3030 and profit target at 6.3400

3. War and inflation are both likely to benefit the safe haven U.S. dollar.

4. A long green candlestick and MACD divergence is hinting of a possible price low.

Fundamental Comments

1. Russian invasion of Ukraine is likely to benefit the safe haven U.S. dollar.

2. Inflation as a result of war is likely to increase the pace of US rate hike.

Technical Comments

1. A long green candlestick is hinting at a possible price and trend reversal

2. Stochastic is rising and MACD is hinting with divergence of a possible price low.



Key Levels

Support6.30356.28256.2550
Resistance6.32156.33206.3445

Technical Overview
USD/JPY – We had a buy call at 115.00 yesterday but our stop was triggered this morning on news of a Russian invasion of Ukraine. We lost 30 pips on this trade. Price has declined and is now near to the previous low of 114.50. A break of this point could be the first sign of a potential price decline to 113.35 over the next few days. Stochastic is declining and both MACD and 20EMA are both hinting at a bearish price trend ahead.

Support114.50114.15113.75
Resistance114.90115.25115.55

EUR/USD – Price broke below the previous low at 1.1280 this morning and we could be heading to the Fibonacci 161.8% target at 1.1150 over the next few days. Stochastic is declining and hinting at a bearish price trend. MACD has turned bearish and is hinting at a bearish price trend as well. The 20EMA is pointing down with a steep slope which is a hint of a strong bearish price trend.

Support1.12201.11851.1145
Resistance1.12601.13051.1350

GBP/USD – Price is at the lower end of a sideways range and a break of this support is likely to send price lower to the previous low at 1.3357 over the next few days. Stochastic has turned lower and is hinting at a bearish price trend. MACD and 20EMA are both bearish and hinting at a strong bearish price trend ahead. Ability to stay above the support at 1.3490 will keep price within the big range of the past few days at 1.3490 to 1.3627.

Support1.34901.34401.3385
Resistance1.35351.35701.3600

XAU/USD – Price broke above the previous high of $1913.83 on news of a Russian invasion of Ukraine. The safe haven yellow metal rose to a high of $1949. The next resistance level lies at $1959.25. Stochastic is currently rising. MACD has turned bullish and is hinting at a bullish price trend. 20EMA is pointing higher with a steep slope which is a sign of a strong bullish price trend ahead.

Support1934.501920.851913.85
Resistance1948.901959.251973.50

USD/CAD – We had a sell order at 1.2760 on Tuesday which was filled when price rallied to a high of 1.2783. We had left stop at 1.2795 and profit order at 1.2660. Price declined to a low of 1.2680 overnight and this morning, price reached a high of 1.2791 as a result of the Russian invasion. Price is likely to test the range high of 1.2795 again. We would recommend closing the position at the current price of 1.2777 for a loss of 7 pips.

Support1.27601.27201.2690
Resistance1.27951.28351.2870

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