Ukraine war ongoing, attention also turned towards central banks

The USD tended to be on the rise on Friday against a number of its counterparts and we must note that the same tendency seems to be on going today during the Asian session as well. The war in Ukraine is ongoing continuing to feed uncertainty to the markets, yet market attention may start shifting partially towards the interest rate decisions which are to be met this week by the Fed, the BoE, CBT and BoJ. For the time being we note that the JPY seems to be experiencing some safe haven outflows as US officials have stated that the Russian side seems to be willing to proceed with substantial negotiations to resolve the issue.

On the other hand we must note that the pressures exercised on Russia through sanctions are substantial and its characteristic that the head of IMF Kristalina Georgieva stated that a Russian default on debts no longer “improbable”. US stockmarkets were in the reds on Friday yet today during the Asian session seem to have some mixed reactions as the week is about to begin while the prospect of the Fed hiking rates may not support US stockmarkets. Oil prices seem to have started the week on the backfoot as during today’s Asian session WTI relented any gains made during Friday while gold prices also seem to be dropping as US yields are on the rise. In the FX market, we note that the AUD is on the retreat and so is the CAD after some initial support the Loonie got on Friday, due to the release of February’s employment report for February with rates and figures being far better than expected.

USD/JPY continued to rise on Friday and during today’s Asian session broke the 117.50 (S1) resistance line now turned to support. We tend to maintain a bullish outlook for the pair currently, yet we must note that the RSI indicator below our 4-hour chart has clearly surpassed the reading of 70, which on the one hand reflects the bull’s dominance yet on the other hand may imply that the pair has reached overbought levels and is ripe for a correction lower. Should the bulls maintain control over the pair, we may see it breaking the 118.40 (R1) resistance line and aim for the 119.50 (R2) resistance level. Should a correction lower take place, we may see the pair breaking the 117.50 (S1) support line and aim for the 116.30 (S2) level.

EUR/USD on the other hand after a wide drop on Friday seems to have stabilised somewhat during today’s Asian session, between the 1.0935 (R1) resistance line and the 1.0870 (S1) support line. For the time being we maintain a bias for a sideways motion, yet we must note that the RSI indicator below our 4-hour chart, is near the reading of 40, which may imply an advantage for the bears. Should a selling interest actually be displayed by the market we may see the pair breaking the 1.0870 (S1) support line and aim for the 1.0820 (S2) level. Should buyers say enough is enough and take over though, we may see EUR/USD breaking the 1.0935 (R1) resistance line and aim for the 1.1000 (R2) level.

Other highlights for today

Today during the European session we get from Sweden the CPI rates for February, as well as France’s trade data for January. Aussie traders on the other hand are to have a busy day during the Asian session tomorrow as we get from Australia RBA’s last meeting minutes as well as China’s industrial output growth rate for and retail sales, both being for February.

As for the rest of the week

On Tuesday during the European session, we get UK’s employment data for January, France’s final HICP rates for February, Germany’s ZEW indicators for March, Eurozone’s industrial production for January and in the American session from Canada we get the number of house start on annualized basis for February and from the US the PPI rates for February. On Wednesday we get Japan’s trade data for February, the US retail sales for February, Canada’s CPI rate for February, while the Fed is to release its interest rate decision later on.

On Thursday we get Japan’s machinery orders growth rates for January, Australia’s employment data for February, Eurozone’s HICP rate for February, from Turkey CBT’s interest rate decision, from the UK BoE’s interest rate decision, while from the US we get the weekly initial jobless claims figure, Philly Fed Business index for March, the industrial production for February and finally New Zealand’s GDP rates for Q4. On Friday we make a start with Japan’s CPI rates for February and BoJ interest rate decision while in the American session we note the release of Canada’s retail sales growth rate for January.

USD/JPY H4 Chart

Support: 117.50 (S1), 116.30 (S2), 115.45 (S3)

Resistance: 118.40 (R1), 119.50 (R2), 120.60 (R3)

EUR/USD H4  Chart

Support: 1.0870 (S1), 1.0820 (S2), 1.0765 (S3)

Resistance: 1.0935 (R1), 1.1000 (R2), 1.1055 (R3)

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