Market Talk
– The U.S. dollar was up on Tuesday morning in Asia, rising against major peers as traders paused for breath amid the fast-moving Ukraine crisis. Officials from Russia and Ukraine held an initial round of ceasefire talks overnight, but the talk produces no result.
– Investors’ focus remains on the Russian invasion of Ukraine and the crisis has seen traders pare bets for a 50 basis-point rate hike on March 16, according to CME’s FedWatch tool.
– The euro resumed its decline, dropping 0.25% to $1.1191, but well off the low of $1.1121 from the previous session. The Euro rose on ceasefire talk between Russia and Ukraine. The safe haven yen and Swiss franc pulled back after their biggest rallies in almost seven weeks against the dollar on Monday
– The risk-sensitive Australian dollar slipped 0.15% to $0.7252, after earlier touching a nearly one-week high of $0.7267. The Reserve Bank of Australia held the key rate steady at a record low on Tuesday, as expected, noting that the Ukraine conflict added a new source of uncertainty to the outlook.
– Gold was little changed on Tuesday morning in Asia, easing after strong performances over the last few sessions. The start of ceasefire talks between Russian and Ukrainian officials and Western countries slapping even more sanctions against Russia dampened the demand for the safe-haven yellow metal.
Chart Focus EUR/USD
Key Points
1. Sell EUR/USD recommendation.
2. Sell EUR/USD at 1.1220. Stop at 1.1255 and profit target at 1.1110
3. War in Ukraine and interest rate differential is in the U.S. dollar’s favour.
4. Price is capped by the 20EMA with MACD hinting at a bearish price trend.
Fundamental Comments
1. Ongoing war in Ukraine is likely to weigh on the Euro.
2. Expected U.S. rate hike in March is likely to increase the interest rate differential in the U.S. dollar’s favour
Technical Comments
1. Price is capped by the 20EMA which is hinting at a bearish price trend.
2. MACD remains bearish and is hinting at a bearish price trend.
Key Levels
| Support | 1.1180 | 1.1135 | 1.1105 |
| Resistance | 1.1225 | 1.1270 | 1.1315 |
Technical Overview
USD/JPY – Yesterday, we were looking for a rest of the high at 115.75 en route to 116.15 but price declined below the 20EMA yesterday. If price were to stay below the 20EMA at 115.25, which is also the Fibonacci 50% correction point of this week’s decline, we are likely to see a decline to the previous low at 114.40 in the next 48 hours. Stochastic is declining and is hinting at a price decline.
| Support | 114.85 | 114.40 | 114.10 |
| Resistance | 115.25 | 115.75 | 116.15 |
NZD/USD – We had a sell recommendation of this pair yesterday but we were wrong. We lost 30 pips on this trade. Stochastic continues to rise, hinting that the current rally to 0.6776 may not be over as yet. MACD confirms the bullish trend and 20EMA is pointing up and hinting at a bullish price trend. Price could continue to the next resistance level at 0.6810.
| Support | 0.6775 | 0.6735 | 0.6695 |
| Resistance | 0.6810 | 0.6850 | 0.6890 |
GBP/USD – After hitting a low at 1.3275 last week, the price rally has been capped by the 20EMA at 1.3425. If price fails to move above the 20EMA resistance, we are likely to see a decline back to 1.3330. A move above the 20EMA will target 1.3530. We favour a decline as MACD remains bearish and is hinting at a bearish price trend. Stochastic is near to the overbought zone and is hinting at a limited upside.
| Support | 1.3385 | 1.3335 | 1.3275 |
| Resistance | 1.3435 | 1.3485 | 1.3540 |
XAU/USD – Price has been moving in a $60 range for this week and we think the consolidation may continue for another day to two. Stochastic is rising from the oversold zone but MACD is flat and neutral at the moment. 20EMA is also flat and neutral at the moment, hinting at a sideways consolidation. Watch the upper boundary of the range at $1919 and the lower boundary of the range at $1859 for clues to the next directional move.
| Support | 1901.30 | 1890.50 | 1878.00 |
| Resistance | 1910.70 | 1921.20 | 1934.70 |
USD/CNH – We had a buy call at 6.3130 on Thursday we had recommended placing stop at 6.3030 and profit order at 6.3400. Price made little movement over the past few days and with price currently at 6.3150, we would recommend closing the position at current level. Stochastic is flat and neutral but MACD is hinting at a possible price low. 20EMA is flat and neutral but is above price.
| Support | 6.3050 | 6.2850 | 6.2550 |
| Resistance | 6.3215 | 6.3320 | 6.3445 |