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
| Support | 6.3035 | 6.2825 | 6.2550 |
| Resistance | 6.3215 | 6.3320 | 6.3445 |
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.
| Support | 114.50 | 114.15 | 113.75 |
| Resistance | 114.90 | 115.25 | 115.55 |
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.
| Support | 1.1220 | 1.1185 | 1.1145 |
| Resistance | 1.1260 | 1.1305 | 1.1350 |
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.
| Support | 1.3490 | 1.3440 | 1.3385 |
| Resistance | 1.3535 | 1.3570 | 1.3600 |
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.
| Support | 1934.50 | 1920.85 | 1913.85 |
| Resistance | 1948.90 | 1959.25 | 1973.50 |
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.
| Support | 1.2760 | 1.2720 | 1.2690 |
| Resistance | 1.2795 | 1.2835 | 1.2870 |