Market attention shifts towards February’s US employment report

As the war in Ukraine rages on, the USD benefited by strengthening further against a number of its counterparts yesterday, while US Stockmarkets seem to be losing ground during today’s Asian session. It should be noted that the second round of negotiations between Russia and Ukraine ended without the two sides achieving a ceasefire. Also please note that Fed Chairman Powell yesterday stated that the Ukraine creates risks for higher inflation. Main market focus though of the market tomorrow is expected to be on the release of the US employment report for February. The NFP figure is expected to drop while the unemployment rate is forecasted to tick down and finally the average earnings growth rate is expected to accelerate.

Should the actual rates and figures actually meet their respective forecasts, we may see the USD getting some support as despite the drop of the NFP figure the number remains high and in the positives, implying that the US employment market was able to create a substantial number of new jobs in February, while the tick down of the unemployment rate implies that the US employment market is still tightening. The possible acceleration of the average earnings growth rate for February if realized would imply that the inflationary pressures could intensify further. The importance of the release was highlighted last Friday as Fed Governor Waller stated that “if, for example, tomorrow’s PCE inflation report for January, and jobs and CPI reports for February indicate that the economy is still running exceedingly hot, a strong case can be made for a 50-basis-point hike in March”.

EUR/USD continued its journey south, breaking the 1.1055 (R1) support line now turned to resistance. We tend to maintain a bearish outlook for the pair as long as it remains below the downward trendline incepted since the 23^rd of February. Please note that the RSI indicator below our 4-hour chart is at the reading of 30 underscoring the bear’s dominance, yet at the same time may imply that the pair is nearing oversold levels and may correct higher. Should the bears actually maintain control over the pair, we may see it breaking the 1.1000 (S1) support line and aim for the 1.0935 (S2) level. Should the bulls take over, we may see the pair breaking the 1.1055 (R1) line, the prementioned downward trendline and take aim of the 1.1120 (R2) level.

Oil prices correct lower

Oil prices were on the rise yet ended the day lower and it should be noted that the threat of a tighter oil market due to the disruption of oil supply because of the war in Ukraine supported oil prices. Even the announcement on Tuesday of an agreement for a coordinated deployment of 60 million barrels by the International Energy Agency’s countries was not able to put a lid on oil’s prices, allowing for WTI to peak at almost $115 per barrel on Thursday, thus reaching a 14 year high. Please note that a wide downward correction in oil prices occurred yesterday, which underscored the volatility reflected by the uncertainty in the oil market.

Negotiations between Iran and the US to reach a new nuclear deal seem to near their completion and a positive outcome is on the horizon yet is still highly uncertain. Even if the two parties reach an agreement and Iran is to reenter as a major oil supplier the international markets, may not be able to fill the gap created by a possible lack of Russian oil supplies. Please note that US lawmakers are about to introduce a ban on the imports of Russian energy products.

WTI prices rose yesterday almost reaching the 115.00 (R1) resistance line yet had a wide correction lower afterwards testing the 106.00 (S1) support line before stabilizing somewhat. We tend to maintain a bias for a sideways motion currently yet note that bullish tendencies are still present for the commodity’s price. Should buyers actually take control over the commodity’s direction, we may see WTI prices breaking the 109.00 (R1) resistance line and aim for the 112.00 (R2) level. If a selling interest is displayed by the market we may see WTI’s price break the 106.00 (S1) support line and aim for the 103.00 (S2) level.

EUR/USD H4 Chart

Support: 1.1000 (S1), 1.0935 (S2), 1.0870 (S3)

Resistance: 1.1055 (R1), 1.1120 (R2), 1.1180 (R3)

WTI H4  Chart

Support: 106.00 (S1), 103.00 (S2), 100.00 (S3)

Resistance: 109.00 (R1), 112.00 (R2), 115.00 (R3)

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