Market Focus

Equities rebounded sharply on Wednesday despite the intensifying conflict between Russia and Ukraine. This also resulted in a surge in crude oil prices. At the same time, US equities moved higher after Fed Chair Jerome Powell’s testimony implied that the rate hike was going to happen in March regardless of the war in Ukraine. The Dow Jones Industrial Averages climbed 1.79% while the Nasdaq Composite gained 1.62%; meanwhile, the S&P 500 added 1.86% at the end of the day on Wednesday.

Following the major economic sanctions toward Russia, rumours have said that major cryptocurrencies might be next, including Bitcoin and Ethereum. According to the statistics from cryptocurrency provider Kaiko, transactions on centralised exchanges in Ruble have surged to the highest levels in months, indicating that Russians might be using cryptocurrencies to hedge the risks resulting from sanctions. With all of that, the US is reportedly trying out a new way to dial up the pressure on Russia and Putin, sanctioning cryptocurrencies like Bitcoin and Ethereum.

As Russia’s turmoil lifts oil prices, OPEC+ eventually ratified a modest supply hike. OPEC+ and its allies have agreed to increase production by 400,000 barrels a day, continuing the gradual restoration of output since the pandemic. However, oil prices continues to surge above $110 a barrel on Wednesday.

Main Pairs Movement

EURUSD fells to slightly below 1.1057, the lowest level in nearly two years. The euro-dollar weakened as fears dominated financial markets. The war between Russia and Ukraine is going to have a negative impact on economic growth, particularly in the Eurozone beyond Russia and Ukraine. On the other hand, the US ADP employment report has added 475K new jobs, better than expected. That being said, the US Fed is more likely to proceed with its planned rate hikes, boosting the US dollar.

Gold declines from near- a 13 month high as risk sentiment is buoyed by the US Fed indicating the commitment to fighting inflation with interest rate hikes. Despite the intensification of the war between Russia and Ukraine, gold dropped more than $17 per ounce in a minute after the speech from Jerome Powell.

WTI rallied for the third consecutive day, targeting a new high of $112.20 since 2017. The market sentiment is upbeat as the market continues to react and digest the impact of sanctions on Russia. The further price action of oil depends on the next steps of OPEC+.

Technical Analysis

GBPUSD (4-Hour Chart)

Cable traded sideways against the Dollar over the course of yesterday’s trading. The U.S. ADP nonfarm employment change came in better than expected, thus boosting the Dollar. In his statement, Fed Chairman Jerome Powell stated his support for a 25 basis point interest rate increase in March; however, Powell reiterated the uncertainty that the crisis in Ukraine and Russia has brought to financial markets. On the economic docket, the U.K. is due to release its February PMI data and the U.S., its initial jobless claims figures for the previous month.

On the technical side, Cable successfully defended the support level at 1.3311. The key resistance level at 1.3435 still stands unchallenged. RSI for the pair has resumed to normal levels at 39.64. At the time of writing, Cable is trading below its 50, 100, and 200-day SMAs.

Resistance: 1.3435, 1.35212

Support: 1.331

EURUSD (4-Hour Chart)

The Euro continued to trade lower against the dollar for the second straight day. As of writing, the shared currency has fallen 0.25% against the greenback. Worse than expected inflation data from the EU has sent the shared currency further down. With the U.S. Fed Reserve set on a tightening monetary policy, the Euro will continue to be disfavored compared to the Dollar.

On the technical side, the support level at 1.1087 still holds but this support level is relatively weak as the pair has dipped below multiple times. RSI for the pair sits at 38.17, as of writing. EURUSD is currently trading below its 50, 100, and 200-sday SMAs.

Resistance: 1.1224, 1.12793

Support: 1.11629

 

XAUUSD (4-Hour Chart)

Gold traded lower over the course of yesterday’s trading as global market participants reassessed the Ukrain- Russia crisis. The Dollar soared with the help of strong U.S. economic data and a strong rebound by U.S. equities. In his State of the Union speech, U.S. President Joe Biden reaffirmed to the American public that President Putin’s aggression will not go without punishment. Fed Chairman Jerome Powell’s support for a 25 basis point rate hike by March has also provided momentum for the greenback.

On the technical side, XAUUSD continued to be capped at 1950 for the past 2 days. The support level for gold at 1920 seems to have formed and the support level at 1900 still stands unchallenged. RSI for the pair has resumed to normal levels at 51.4, as of writing. Currently, XAUUSD is trading above its 50, 100, and 200-day SMAs.

Resistance: 1909.16, 1953.407

Support: 1920, 1900