Market Focus

US and EU equities posted sharp gains on Wednesday as recently surging commodities prices cooled off as the war between Russia and Ukraine continues. All three major US indices climbed more than 2%, while German index DAX 40 soared 7.92%, up 1016.42 points. Wednesday’s gains dragged most of the indices out of correction territory, like the Dow Jones Industrial Average and the Nasdaq composite.

Amazon surged more than 10% in the late trading session after it announced its 20-for-1 stock split with a $10 billion buyback. The split would decrease Amazon’s stock price to less than $150 following Wednesday’s closing price, which will remove a major hurdle for its inclusion in the Dow Jones Industrial Average.

Crude oil prices dropped suddenly, cooling the rally that has been going on all month following the tension between Russia and Ukraine. The price action of the crude oil potentially came amid the indications of possible progress by the US in encouraging more oil production. At the same time, one of the major exporters, Iraq, mentioned that it could increase its production if OPEC+ asked.

Main Pairs Movement

Gold plunged more than $60 per ounce and was trading at $1,990 on Wednesday as Ukraine’s diplomacy might help with easing the geopolitical tension with Russia. Gold sank as much as 3.6%, the worst intraday decline since last year. However, gold is still up 9% this year amid inflation concerns.

EURUSD witnessed a rally on Wednesday and is up 1.64% at 1.10740. The euro got boosted on hopes that the Russia-Ukraine crisis could ease, thus weakening the safe-haven US dollar. Further price movements will depend on the first tier events scheduled for Thursday, including the interest rates decision from the ECB.

GBPUSD rebounded on Wednesday and is trading at 1.31757 as the markets are optimistic about a compromise between Russia and Ukraine.

The Japanese Yen traded near one-month lows before the release of the US CPI report. USDJPY changed a bit and is trading at 115.83, the highest since February.

Technical Analysis

GBPUSD (4-Hour Chart)

Revived optimism in the markets has boosted the British pound against the dollar in the early Asian trading hours. Ukraine President Zelensky has expressed that he would no longer pursue membership in NATO. Britain’s FTSE index rose an impressive 2%, while U.S. equity futures also rose during early trading. With Britain and the U.S. both announcing a proposed ban on Russian oil imports, their respective central banks would need to re-evaluate the long term impacts that these sanctions could have, and rethink monetary policy trajectories should these sanctions hurt economic growth.

On the technical side, despite increased buying interest in Cable, the pair still traded in a tight range with the resistance level at 1.3185 firmly intact. As of writing, RSI for Cable sits at 43.15. Cable is currently trading below its 50, 100, and 200-day SMAs.

Resistance: 1.3185

Support: 1.2998, 1.2876

 

EURUSD (4-Hour Chart)

The euro-dollar pair mounted a remarkable comeback as tensions between Ukraine and Russia seem to have ebbed for the short term. As of writing, the euro has gained 1.3% against the dollar. Ukraine’s President Zelensky has expressed a reversal to his previous insistence on joining NATO. President Zelensky’s reversal has been interpreted by market participants as a step towards the resolution of the Russia-Ukraine conflict.

On the technical side, EURUSD has broken through our previously estimated resistance level of 1.0946. The next level of resistance currently sits at 1.1127. RSI for the pair currently sits at 60.75, recovering from oversold territory. EURUSD is currently trading below its 50, 100, and 200-day SMAs.

Resistance: 1.1127

Support: 1.0839, 1.0766

XAUUSD (4-Hour Chart)

Gold experienced a sharp retrace after news broke from Ukraine that the President was no longer insisting on joining NATO. After reaching $2070 per ounce, Gold is now trading below $2000 per ounce again. The huge shift in risk sentiment was not only evident in Gold prices but also reflected in global equity indices. However, market participants should be aware of the velocity of Gold’s price shifts and note that the conflict between Ukraine and Russia has yet to reach a concrete resolution.

On the technical side, a new resistance level for Gold has formed at the $2052 per ounce price region. Despite huge intraday drops, the support level at $2000 per ounce still holds. RSI, at the time of writing, sits at 53.8. XAUUSD is trading above its 50, 100, and 200-day SMAs.

Resistance: 2052

Support: 2000, 1982