Market Focus

US equities pared most of the earlier losses Wednesday afternoon after the Federal Reserve’s latest meeting minutes provided more clarity on the central bank’s thinking about addressing inflationary pressures. The S&P 500 turned slightly positive and recovered losses after dropping as much as 0.9% earlier. Dow Jones recbounded near 300 points from intraday low, closing merely 0.16% lower, while tech-heavy Nasdaq ended the day 0.11% lower, regained near 200 points from daily lows.

Federal Reserve officials concluded in January that they would start raising interest rates soon and were on alert for persistent inflation that would justify a faster pace of tightening. Minutes of the Jan. 25-26 Federal Open Market Committee meeting, released Wednesday, said most policy makers “noted that, if inflation does not move down as they expect, it would be appropriate for the Committee to remove policy accommodation at a faster pace than they currently anticipate.”

But the minutes preceded data since then showing a roaring job market and a further jump in inflation that’s spurred more hawkish bets in markets. Investors see at least 150 basis points of tightening in 2022, up from 75 basis points just a few weeks ago, as the evidence continues to show a bubbling economy that’s experiencing the fastest price growth in 40 years.

U.S. consumer prices rose to a four-decade high of 7.5% in January. In the labor market, employers added almost half a million new jobs last month despite record Covid-19 cases, and wages surged. Fed officials will have the February data in hand for both reports before it meets next month.

Main Pairs Movement:

The dollar Index edged further south on Wednesday, despite the release of upbeat US data and uncertainty amid Russian – Ukrainian border tensions. Government bond yields remained up the upper end of their weekly range, with the benchmark 10-year Treasury yield hovering above 2.00%. Also, the Fed released the FOMC meeting Minutes, which indicated that policymakers are willing to hike rates but did not mention a 50 bps move in March. US Retail Sales were up 3.8% in January, much better than anticipated, while Industrial Production in the same month surged by 1.4% vs the 0.4% expected.

EUR/USD trades around 1.1390, while GBP/USD flirts with 1.3600 amid the broad dollar’s weakness. The AUD/USD pair is also up, trading around 0.7200, while USD/CAD lags, hovering around 1.2670, capped by the crude oil prices weakness. Safe-haven currencies managed to advance against the greenback, with USD/CHF down to 0.9210.

Commodities posted mixed. Gold price regained $1,870 a troy ounce during Wednesday’s trades, recovering most of its Tuesday’s losses. On the other hand, the black gold retreated sharply from its daily high, with WTI trades around $90.60 a barrel, and Brent around $92.70.

Technical Analysis:

EURUSD (4-Hour Chart)

The EUR/USD pair edged higher on Wednesday, continuing to rebound towards 1.1400 area amid modest upbeat market sentiment. The pair started to see fresh buying in early Asian session and touched a daily high near 1.1395 mark during European session, then retreated below 1.1370 level amid rebounding US dollar. The pair is now trading at 1.1362, posting a 0.05% gain on a daily basis. EUR/USD stays in the positive territory amid weaker US dollar across the board, as investors remain mildly optimistic today, expecting the geopolitical tensions between Russia and Ukraine to ease. But hawkish Fed expectations and upbeat US Retail Sales data should help limit any further losses for the greenback. In Europe, Industrial Production in the euro area rises by 1.2% in December, surpassing market expectations of 0.3%.

For technical aspect, RSI indicator 51 figures as of writing, suggesting that there is no obvious direction for the pair now. As for the Bollinger Bands, the price continues to rise towards the upper band, which indicates that the upside traction should persist. In conclusion, we think market is consolidating in 1.1350~1.1400 area as RSI indicator lacks directional strength. The bullish side will become firmer if the pair breaks above the 1.1424 support level.

Resistance:  1.1424, 1.1465

Support: 1.1284, 1.1196, 1.1132

GBPUSD (4-Hour Chart)

The pair GBP/USD advanced on Wednesday, bouncing back from a two-week low below 1.3500 mark that touched yesterday. The pair was trading higher during Asian session and touched a daily high above 1.3580 level in early American session, preserving bullish traction for the second successive day. At the time of writing, the cable stays in positive territory with a 0.31% gain for the day, flirting with 1.3570~1.3580 area. The receding geopolitical tensions between Russia and Ukraine has lend some supports to the cable, but the data showing that US Retail Sales rise by 3.8% might limit the upside for GBP/USD. For British pound, the UK Consumer Prices Index (CPI) rises by 5.5% in January, which was higher than market’s expectation and strengthened the case for additional rate hikes this year by Bank of England.

For technical aspect, RSI indicator 58 figures as of writing, suggesting that upside is more favored as the RSI stays above the mid-line. As for the Bollinger Bands, the price is rising towards the upper band, indicating that the bullish momentum is gathering strength. In conclusion, we think market will be bullish as the RSI indicator heads towards 60, hinting at a buying interest by investors. If the pair breaks above the 1.3612 resistance and starts using that level as support, short-term gains could be expected.

Resistance: 1.3612, 1.3680, 1.3739

Support: 1.3513, 1.3456, 1.3372

USDCAD (4-Hour Chart)

As the market mood keeps swinging between risk-on/off, the pair USD/CAD witnessed downside momentum and extended its intraday losses amid renewed US dollar weakness. The pair was surrounded by bearish momentum most of the day, dropping to a daily low below 1.2670 level in late European session. USD/CAD is trading at 1.2743 at the time of writing, rising 0.13% on a daily basis. Despite yesterday’s news have eased the concern about tensions between Russia and Ukraine, US Secretary of State Blinken said on Wednesday that they continue to see Russian troops moving towards the border and caused a turnaround in market sentiment. On top of that, surging crude oil prices also acted as a headwind for USD/CAD, as WTI rebounded back above $94.00 amid confusion about a troop withdrawing by Russia.

For technical aspect, RSI indicator 43 figures as of writing, suggesting bear movement ahead. As for the Bollinger Bands, the price is now consolidating near the lower band, indicating that a continuation of downside traction could be expected. In conclusion, we think market will be slightly bearish as the pair might re-test the 1.2665 support. Meanwhile the hotter-than-expected Canadian CPI report will keep supporting the commodity-linked loonie.

Resistance: 1.2770, 1.2829

Support: 1.2665, 1.2575, 1.2461

Economic Data:

Market Focus Stocks advanced, while bonds fell with the dollar as speculation that geopolitical tensions could be easing overshadowed data showing inflation is still running hot. The equity market halted a three-day drop as Russian President Vladimir Putin announced a partial pullback of thousands of troops massed near the Ukrainian border. Tech shares led gains in the S&P 500, while energy producers joined a slump in oil. Dow Jones closed 1.22% higher to 34,988.84, while the Nasdaq Composite saw its best day in two weeks, advancing 2.53% to 14,139.76.

President Joe Biden said it remains possible that Russia will invade Ukraine because its troops remain in a “threatening position,” and said that the U.S. has not verified Moscow’s claims that it has withdrawn some forces.

“We should give the diplomacy every chance to succeed, and I believe there are real ways to address our respective security concerns,” Biden said at the White House on Tuesday. “To the citizens of Russia: You are not our enemy. And I do not believe you want a bloody, destructive war against Ukraine.”

Biden and his team have sought to deter a Russian invasion, which would plunge Europe into its biggest security crisis in decades and pose a new challenge for his embattled presidency. He said the U.S. stood ready to respond to a Russian attack with crippling economic sanctions, but warned Americans they could pay even higher fuel prices as a result. Russian President Vladimir Putin has repeatedly denied he intends to invade Ukraine, even while massing tens of thousands of troops as well as tanks, artillery and other equipment on the country’s borders. Biden said Russia now has about 150,000 troops in place around Ukraine.

Main Pairs Movement:

The sentiments improved on Tuesday as traders rushed to price in a de-escalation of the Russia-Ukraine tensions after the Russian Minister of Defense announced that some of the troops at the border would return to their bases. However, words from Russian President Vladimir Putin released during the American afternoon seemed not that cheering.  Putin said that he is not satisfied with assurances that Ukraine will not become a NATO member in the near future and wants the issue to be settled right now or soon through a negotiating process.

Demand for the dollar receded, but its decline was partially offset by renewed strength in government bond yields. The US benchmark 10-year Treasury yield rose to 2.05% on Tuesday.

The Euro pair settled in the 1.1360 region, while Cable lingers around 1.3540. Commodity-linked currencies advanced despite weakness of gold and crude oil prices. The AUD/USD pair regained 0.7150, NZD/USD recovered to 0.6640 levels, while Loonie trades around the 1.2720 price zone. Commodities plummeted, with gold nosediving to the current $1,850 area, and crude oil prices shed a good bunch of their recent gains, with WTI closing Tuesday at around $92.10 a barrel, and Brent at $93.36.

Technical Analysis:

EURUSD (4-Hour Chart)

The EUR/USD pair advanced on Tuesday, starting to rebound after the news earlier in the session showed that the tensions between Russia and Ukraine have eased. The pair consolidated in 1.1310~1.1320 area during Asian session, then started to see fresh buying and edged higher in early European session. The pair is now trading at 1.1325, posting a 0.19% gain on a daily basis. EUR/USD stays in the positive territory amid weaker US dollar across the board, as the safe-haven greenback struggles to find demand amid improving market sentiment. Russia’s Defense Ministry announced that Russian troops are returning to their bases following the completion of military drills, which support the market mood and acted as a tailwind for the EUR/USD pair. In Europe, Eurostat released the Q4 GDP growth figures today, which came in marke’s expectations of 0.3%.

For technical aspect, RSI indicator 41 figures as of writing, suggesting bear movement ahead. As for the Bollinger Bands, the price is falling from the moving average, which indicates that the pair could witness some short-term downside momentum. In conclusion, we think market will be bearish as long as the 1.1360 resistance line holds. But if the pair rises above that level and starts using it as support, it could target 1.1400 mark.

Resistance:  1.1360, 1.1465 Support: 1.1284, 1.1196, 1.1132

GBPUSD (4-Hour Chart)

The pair GBP/USD edged lower on Tuesday, failing to preserve its bullish momentum amid renewed US dollar strength. The pair touched a daily high above 1.3560 level in early European session, then lost its traction and dropped to the lowest level since February 1 during early American session. At the time of writing, the cable stays in negative territory with a 0.03% loss for the day, trying to bounce back slightly. The improving market mood has lend some supports to the cable, as some Russian troops are returning to their base meanwhile eased the tensions between Russia and Ukraine. But now investors awaits new developments on the Russia-Ukraine conflict to decide next direction for cable. For British pound, the UK Claimant Count Change showed that the number of people claiming unemployment-related benefits fell by 31.9K in January as against 43.3K previous.

For technical aspect, RSI indicator 44 figures as of writing, suggesting that downside is more favored as the RSI stays below the mid-line. As for the Bollinger Bands, the price is moving towards the lower band after crossing below the moving average, therefore the downside traction should persist. In conclusion, we think market will be slightly bearish as the pair is heading to test the 1.3513 support. But if market mood continues to improve, this could lift the pair up and a break above 1.3612 level could extend its recovery.

Resistance: 1.3612, 1.3680, 1.3739 Support: 1.3513, 1.3456, 1.3372

USDCAD (4-Hour Chart)

As the risk of geopolitical conflict eases, the pair USD/CAD witnessed upside momentum and recovered its intraday’s losses amid falling crude oil prices. The pair dropped to a daily low during European session, but then staged a goodish rebound towards 1.2760 area after American session started. USD/CAD is trading at 1.2743 at the time of writing, rising 0.13% on a daily basis. The positive turnaround in market mood weighed on the safe-haven US dollar and acted as a headwind for the major earlier in the session. But a sharp pullback in crude oil prices has lent strong support to USD/CAD pair, as WTI fell sharply from multi-year highs back to the $91.00 area. Russian President Vladimir Putin said that a decision on partial troop withdrawal had been taken, which eased the concerns about a potential disruption of oil supply.

For technical aspect, RSI indicator 55 figures as of writing, suggesting that the pair could remain its upside movement as the RSI start heading north. As for the Bollinger Bands, the price crossed above the moving average, indicating a possible upside traction for the pair. In conclusion, we think market will be slightly bullish as the pair is testing the 1.2778 resistance. If the pair break above that level, the bullish momentum could further get extended towards the 1.2850 area.

Resistance: 1.2778, 1.2829

Support: 1.2665, 1.2575, 1.2461

Economic Data:

The world economic cycle often experiences boom and bust periods. Since the introduction of the financial markets, there have been many bubbles, crises, wars, global economic downturns, global economic euphoria, geopolitical problems, and many more.

With such circumstances, of course, you need a balanced portfolio to protect your investment capital. One of the wise pieces of advice in finance is to diversify and balance your portfolio to minimize risk in the event of a global financial crisis.

Or, from a trader’s point of view, what assets should you trade to keep your exposure stable?

A broader definition of safe haven assets

Safe haven assets are financial instruments expected to maintain or even gain value during periods of economic downturn. The price of this asset is constantly changing and does not depend on the economy as a whole. So, there is a high demand for this asset class in times of crisis.

Safe haven assets must have certain characteristics which include:

• Permanent regardless of general market volatility. Force majeure does not have a significant effect on safe havens, but in the event of force majeure, investor capital flows to protective assets because if there is instability, investor confidence in safe havens will increase.
• Protection from inflation. The higher the yield, the greater the risk. That is why safe-haven assets do not have high yields. But the increase should, at least, beat inflation.
• Minimum exposure to price changes. This means that this asset class should have the least volatility and the greatest liquidity.

Assets that meet the above definition are:

• Government Bonds – One of the disadvantages of government bonds is their low yields which do not always cover inflation. But in times of a downturn in the economy, government bonds are one of the assets that shine because of their ability to yield returns and protect investors’ capital.

• Currency – The US dollar is by far one of the few currencies that analysts recommend adding to one’s investment portfolio for diversification purposes. Global confidence in this currency is strong, despite the size of the debt that continues to grow. The euro does not perform well in times of economic troubles in the eurozone, and therefore, is not considered a safe haven asset. During the crisis, there was, indeed, an increase in demand for the Swiss franc. But this currency has liquidity problems, so not all investors have access to buy and sell Swiss francs. The Japanese yen used to be a safe haven, but it has changed because Japan had been trying to reduce deflation for a long time. The Japanese government, on the other hand, is looking for ways to devalue the local government, that is why the yen can no longer be considered a safe haven.

• Gold – Gold is an asset with social construction and a history of thousands of years throughout human civilization. In times of crisis, investors’ capital flows into gold significantly. The limited supply and demand from the industry is the main factor in the stability of gold prices. But the main problem with investing in gold is the shape. It doesn’t make sense to invest in physical gold, where you will have to spend 10-30% more money because producers pass various costs on producing gold to consumers. After all, physical gold can oxidize if it comes into contact with air. It makes more sense to buy and trade gold CFDs because of the lower cost.

• Mutual funds and ETFs – Mutual funds and ETFs can be considered safe havens because automatically, the assets of this class are well diversified. However, during the crisis, their hedging function weakened and experienced a decline, along with other assets. This investment relieves the investor of the responsibility for the formation of a balanced portfolio, but the risk of mismanagement of funds remains.

Create a trading strategy that implements a balanced diversification strategy

we discussed about the safe-haven perspective from the perspective of investors. But for those of you who trade in financial markets, the above doesn’t make much sense, especially for Forex-Gold traders. It is not possible to implement a portfolio by buying, for example, US Government Bond CFDs, and holding them for a long period because the timeframe horizon is short term. One way to diversify our trading portfolio is to do a comparison of 3 assets.

Let’s compare the three graphs below:

XAUUSD Chart, TimeFrame D1

XAGUSD Chart, Timeframe D1

XAUXAG Chart, TimeFrame D1

Please compare the 3 charts above and apply your trading system to the three charts. Let’s say that based on your trading strategy on the XAUXAG chart, XAU may strengthen against XAG. But on the XAUUSD chart, your trading strategy gives a sell signal.

On the XAGUSD chart, your trading strategy gives a sell signal, too. Of course, it makes more sense to open a sell position on XAGUSD and diversify your risk by opening a sell position or a buy position on XAU with the number of lots or less risk than your main position on XAGUSD, hoping that the risk won’t be too big.

This is like the hedge, but here we compare the correlation between 3 currencies and enter the currency that is likely to move fast.

Market Focus

All three major indexes fell sharply after Secretary of State Anthony Blinken announced that he would relocate U.S. diplomatic operations to western Ukraine, a possible sign of an imminent Russian invasion. Ukrainian President Volodymyr Zelensky said Wednesday would be the day of the attack, adding to the uncertainty. However, Ukrainian officials later said Zelensky had not predicted an attack that day, but was skeptical of foreign media reports. At the end of the market, the Dow Jones Industrial Average fell 0.49% to 34,566.17 points, the S&P 500 index lost 0.38% to 4,401.67 and the Nasdaq Composite Index dropped 0.24 points to 13,790.92 points.

Nine of the 11 sectors in the S&P 500 ended lower, with energy falling the most, down 2.24%, followed by financials and healthcare, down 1.11% and 1.09%, respectively. The only winners were consumer discretionary and communications services, which rose 0.58% and 0.32%, respectively. Oil prices rose sharply as a barometer of tensions on the Ukrainian border amid the prospect of potential supply disruptions. However, the sharp rise in oil prices did not prevent energy stocks from falling more than 2%. APA, Marathon Oil and Occidental Petroleum led the declines, which slipped 5.86%, 4.50% and 4.07%, respectively. In addition, healthcare stocks also weighed on the market, weighed by weakness in vaccine makers and investors pulling out on fears that a drop in Covid-19 cases would dent demand for a coronavirus vaccine. Novavax slipped 11.42%, Moderna dropped 11.68%, and Pfizer lost 3.08%. On the other hand, tech stocks performed relatively well on the day, supported by gains in semiconductor stocks. Micron Technology and Advanced Micro Devices led gains of more than 2% and 3%, respectively, after the latter announced that it had completed a acquisition for Xilinx for $50 billion. Meanwhile, Splunk rose more than 9% after it reportedly received a $20 billion takeover offer from Cisco Systems.

Main Pairs Movement:

Tensions between Russia and Ukraine dominated financial markets on Monday, leading to some strong safe-haven demand. The catalyst was a statement from U.S. President Joe Biden, who told Ukrainian President Volodymyr Zelensky on Sunday that the U.S. would respond “quickly and decisively” if Russia made further incursions. Hence, the U.S. dollar and gold benefited the most in a risk-off environment, and were further boosted by comments from St. Louis Fed President Bullard, who reiterated his call for a 100bps rate hike by July 1. Finally, the DXY gained 0.27% and the precious metal was up 0.69%, almost hitting its November 2021 high and hitting a new 2022 high.

The currency was relatively weak against the U.S. dollar as the greenback strengthened. EUR/USD fell for a second day, down 1.10%, back in consolidated range. Finally closed at 1.13057. Sterling was in a similar pattern against the dollar, falling for two days in a row but only down 0.22% to close at 1.35233.

Concerns about supply disruptions continue to push oil prices higher, with prices up around 26% in 2022, with numbers likely to keep refreshing amid tensions between Russia and Ukraine. At the end of the market, the WTI closed at $94.76 a barrel and Brent at $95.70 a barrel.

Technical Analysis:

EURUSD (4-Hour Chart)

The EUR/USD pair declined on Monday, continuing to edge lower after last week’s news about the tensions between Russia and Ukraine elevated. The pair was surrounded by bearish momentum most of the day, touching a ten-day low below 1.1310 level during European session. The pair is now trading at 1.1319, posting a 0.23% loss on a daily basis. EUR/USD stays in the negative territory amid stronger US dollar across the board, as safe-haven flows dominated the financial markets amid renewed fears over a Russia-Ukraine military conflict. The risk-off market sentiment lend support to the safe-haven greenback and weighed on EUR/USD pair. In Europe, recent dovish aspect from ECB might keep acting as a headwind for the Euro. Meanwhile investors await for ECB President Christine Lagarde’s speech later in the session, which might provide fresh impetus for the EUR/USD pair.

For technical aspect, RSI indicator 33 figures as of writing, suggesting bear movement ahead. As for the Bollinger Bands, the price is moving alongside the lower band, which indicates that the pair could remain its downside traction. In conclusion, we think market will be bearish as the pair is heading to test the 1.1284 support. A break below that level could open the road for additional losses, as RSI is currently approaching oversold territory.

Resistance: 1.1360, 1.1465

Support: 1.1284, 1.1196, 1.1132

GBPUSD (4-Hour Chart)

The pair GBP/USD edged lower on Monday, extending its recent pullback from the 1.3645 region that touched last week amid risk-off market mood. The pair dropped to one-week lows below 1.3500 mark during the first half of the European session, but then rebounded slightly to erase some of its intraday’s losses. At the time of writing, the cable stays in negative territory with a 0.24% loss for the day, struggling to climb higher around the 1.3520 area. Reports claiming that Russia could invade Ukraine this week undermined safe-haven assets such as greenback, and the DXY index is now climbing to its ten-day high near 96.30. For British pound, tensions over the Northern Ireland protocol of the Brexit agreement and last Friday’s downbeat UK GDP report might keep weighing on the GBP/USD pair.

For technical aspect, RSI indicator 43 figures as of writing, suggesting that downside is more favored as the RSI stays below the mid-line. As for the Bollinger Bands, the price is moving towards the lower band after crossing below the moving average, therefore the downside traction should persist. In conclusion, we think market will be bearish as long as the 1.3612 resistance line holds. On the downside, near-term losses could be expected if the pair break 1.3512 support as safe-haven flows continue to dominate markets.

Resistance: 1.3612, 1.3739

Support: 1.3512, 1.3456, 1.3372

USDCAD (4-Hour Chart)

After last Friday’s rebound to 1.2740 area, the pair USD/CAD preserved its bullish momentum and climbed higher amid US dollar strength. The pair reached a ten-day top above 1.2780 level during European session, but then pulled back to surrender most of its daily gains. USD/CAD is trading at 1.2735 at the time of writing, losing 0.1% on a daily basis. The greenback was underpinned by surging US Treasury bond yields, as the risk of a further escalation in the conflict between Russia and Ukraine hurt market sentiment and favored the safe-haven greenback. On top of that, rebounding crude oil prices has now put some pressure on USD/CAD pair as WTI reach multi-year highs near $95.00 mark. Investors worry about that the conflict between Russia and Ukraine could disrupt oil supply, which underpinned the commodity-linked loonie.

For technical aspect, RSI indicator 53 figures as of writing, suggesting that the pair could remain its downside movement as the RSI start heading south. As for the Bollinger Bands, the price is falling from the upper band, indicating a continuation of the downside traction. In conclusion, we think market will be bearish as long as the 1.2789 resistance line holds. If Russia invades Ukraine, crude oil prices could surge significantly and probably exceed $100 per barrel.

Resistance: 1.2789, 1.2831

Support: 1.2667, 1.2575, 1.2461

Economic Data:

Market Focus

U.S. equity futures wavered early Monday and stocks appeared set for a cautious open as investors assessed geopolitical worries about Ukraine that sparked risk aversion at the end of last week. Dow Jones dropped 1.43% to 34738.06 during Friday’s trades, while tech-heavy Nasdaq slumped worse, closed 2.78% lower than its Friday’s open.

Tensions over Russia’s military buildup near Ukraine are entering a potentially decisive week, with the U.S. warning an invasion may be imminent and President Vladimir Putin accusing America of failing to meet his demands. U.S. National Security Advisor Jake Sullivan, who on Friday cited the risk that Russia will attack or seek to ignite conflict within Ukraine this week, told CNN on Sunday there’s “a distinct possibility that there will be major military action very soon.”

The U.S. and its European allies have been pressing Putin for weeks to pull back an estimated 130,000 troops massed near Ukraine, but a frenzy of diplomatic activity — including key leaders cycling through Moscow for talks with Putin — has failed to produce an off-ramp.

A phone call on Saturday between Putin and U.S. President Joe Biden that went for just over an hour saw them reiterate their positions without any apparent progress. Russia has repeatedly denied it plans to invade its neighbor and Russian officials accuse the U.S. of stoking “hysteria.”

Even as the U.S. and Europe threaten what they say would be severe economic penalties for Moscow, there are differences about how heavily to respond, especially for countries like Germany that rely on imports of Russian gas. Cutting Russia off from the global payments system known as Swift is highly unlikely. And Biden has said he would not send U.S. troops into Ukraine in the event of a conflict.

Main Pairs Movement:

After Thursday’s rally amid record CPI data, US bond’s yield slumped heavily as a strong correction shocked during Friday’s trading. Despite the declining yields, the dollar index still close the day in green, up 0.25%, but volatility was enlarged during the intraday trades.

With a stronger greenback, most its peers suffered losses on Friday. The Euro pair plummeted 0.72% to 1.1345, while the Cable defended its previous levels, closing the day in mere losses at 1.3514. Earlier on Thursday, the European Commission raised its inflation forecast for this year from 3.5%, but still expects inflation to fall to 1.7% in 2023.

Gold surged a significant 1.77% to $1,858.98 a troy ounce, even once topped at $1,865.47, a level last seen in November 2021. Crude oil prices also bounced hugely amid the market fear of Russia-Ukraine conflict escalation. With WTI closed 4.27% higher at $93.88 a barrel and Brent up 3.92% to $94.94.

Technical Analysis:

EURUSD (4-Hour Chart)

The EUR/USD pair declined on Friday, extending its slide to 1.1390 area post-US CPI report. The pair was trading lower and dropped to a daily low below 1.1380 level, but then bunce back slightly to erase some of its intraday’s losses. The pair was last seen trading at 1.1387, posting a 0.35% loss on a daily basis. EUR/USD stays in the negative territory amid rebounding US dollar, as investors continue to evaluate the recent multi-decade high in US inflation in January, which might adds pressures on the Fed to tighten monetary policy. In Europe, the data from Germany showed that Final Germany CPI came at 0.4% MoM in January, matching market expectations. Meanwhile speculations of a potential rate hike by the ECB at some point by year end could limit the losses for EUR/USD.

For technical aspect, RSI indicator 46 figures as of writing, suggesting that the downside is more favored as the RSI stays below the midline. As for the Bollinger Bands, the price is moving alongside the lower band, which indicates that the pair could remain its downside traction. In conclusion, we think market will be bearish as long as the 1.1480 resistance line holds. EUR/USD could extend its slide toward 1.1350 amid the bearish shift in RSI indicator.

Resistance: 1.1480, 1.1600

Support: 1.1323, 1.1284, 1.1132

GBPUSD (4-Hour Chart)

The pair GBP/USD edged higher on Friday, attracting some dip-buying amid modest US dollar weakness. The pair was surrounded by bearish momentum and touched a daily low during Asian session, but start to see fresh buying while recovering its daily losses. At the time of writing, the cable stays in positive territory with a 0.38% gain for the day, continuing to climb higher amid renewed US dollar weakness. Retreating US Treasury bond yields undermined the greenback, which consolidates its daily losses heading into the weekend. For British pound, UK GDP data, which showed that the economy expanded by 1% during the fourth quarter of 2021, coming in slightly lower than the market expectation. But the number failed to provide trading impetus to the cable.

For technical aspect, RSI indicator 58 figures as of writing, suggesting bull movement ahead. As for the Bollinger Bands, the price keeps heading north and just moves out of the upper band, so a strong trend continuation can be expected. In conclusion, we think market will be bullish as the pair is heading to test the 1.3633 resistance line. If the pair rise above that level, it could push higher toward 1.3700 mark. And the 1.3512 level had provided firm support to the cable.

Resistance: 1.3633, 1.3739

Support: 1.3512, 1.3456, 1.3372

USDCAD (4-Hour Chart)

After previous day’s rally to 1.2750 area, the pair USD/CAD failed to preserve its bullish momentum and retreated from a weekly high amid weaker US dollar across the board. The pair started to see fresh selling after European session started, now remaining under pressure below 1.2700 mark. USD/CAD is trading at 1.2689 at the time of writing, losing 0.26% on a daily basis. The greenback was dragged down by retreating US Treasury bond yields, as the DXY index pulled back to 95.70 area. On top of that, surging crude oil prices also underpinned the commodity-linked loonie, as markets believe that global oil supply would remain tight. Meanwhile the conflict between Russia and Ukraine might keep acting as a tailwind for black gold. WTI revisits $91 again and posts a 1.58% gain on a daily basis.

For technical aspect, RSI indicator 47 figures as of writing, suggesting that the pair could extend its downside movement as the RSI keep heading south. As for the Bollinger Bands, the price cross below the moving average and drop towards the lower band, indicating a continuation of the downside traction. In conclusion, we think market will be bearish as the pair is heading re-test the 1.2665 support, a break below that level could open the door for additional losses.

Resistance: 1.2778, 1.2829

Support: 1.2665, 1.2575, 1.2462

Economic Data:

No major events scheduled today.

Dear Client,

Along with the gradual recovery of International financial markets, the trading environment for major oil products becomes more stable. Therefore, it’s VT Markets’s pleasure to announce that there’ll be relaxation, which is stated below, on the requirements of trading oil products.

1. The leverage of oil products will be between 100:1 and 500:1 (It’s subject to your account leverage) instead of being fixed at 333:1.
VT Markets will enforce this new policy at:
00:00 on Feb. 21st, 2022 (GMT+2).

Notes： The figures above are only for reference. The actual execution data should be subject to the numbers on MT4/MT5.

Friendly reminders:

1. All contract specifications of Indices stay the same except the stops-levels and leverages.

2. If there’s any Indices position in your trading account and your account leverage is between 100:1 and 300:1, there might be liquidations due to increasing margin requirements after the leverage modification. Therefore, VT Markets recommends that you retain sufficient funds in your trading account before this modification to keep those positions.

If you’d like more information, please don’t hesitate to contact [email protected].

Market Focus

Wall Street’s three major indexes ended sharply lower on Thursday after better-than-expected U.S. consumer price data and subsequent comments from Federal Reserve officials stoked fears that the central bank will raise interest rates sharply to fight inflation, pushing the 10-year U.S. Treasury yield higher , making the yield topped 2%, and tech stocks fell after being under pressure. Regarding the CPI data, U.S. Labor Department data showed that consumer prices surged 7.5% on a year-over-year basis, beating economists’ expectations for a 7.3% increase and the largest annual inflation increase in 40 years. At the end of the market, the Dow Jones Industrial Average fell 1.47% to 35,241.59 points, the S&P 500 index lost 1.81% to 4,504.06 and the Nasdaq Composite Index slipped 2.1% to 14,185.64 points. The S&P 500 is now down about 5% in 2022, the Nasdaq is down about 9%.

The 11 sectors of the S&P 500 were dismal. The biggest loser was the real estate sector, down 2.86%, followed by the information technology and utilities sectors, down 2.75% and 2.61%, respectively. Large-cap stocks rose Apple, Alphabet, Meta Platforms, Amazon all fell more than 1%, Tesla, Nvidia and Microsoft all fell about 3%. However, there were some positives in the market, like their impressive quarterly earnings. Coca-Cola rose 0.5% after reporting fourth-quarter results that beat Wall Street expectations, and Walt Disney rose more than 3% after reporting better-than-expected quarterly results, helped by strong growth in its parks business and upbeat subscriber numbers.

Main Pairs Movement:

As the soared on the CPI data, pushing the government bond yields another high level. U.S. 10-year yields surged to 2.02%, crossing the 2% threshold for the first time since 2019, while 2-year yields were as high as 1.51%. The rising yield, providing some momentum for the dollar, which rose 0.51% after the data, but then retreated 0.84%.

As the mixed movement on the greenback, competitors also oscillated intraday. EUR/USD topped 1.14948 level, a new 2022 high, then retreated to 1.14270 area. Earlier in the day, the European Commission raised its inflation forecast for this year from 3.5%, but still expects inflation to fall to 1.7% in 2023. Sterling followed a similar move, with GBP/USD holding on to intraday gains after hitting a monthly high of 1.3643 but then closing just below the 1.3600 level.

Gold jumped to $1,841.83 per ounce but fell back to the $1,830 area. Crude oil prices were little changed at the close. OPEC raised its forecast for crude demand in 2022 by 100K bpd, but reported an increase of 64K bpd in January, lagging the increase in OPEC+ commitments. At the end, WTI closed at $90.03 a barrel and Brent at $91.36 a barrel.

Technical Analysis:

EURUSD (4-Hour Chart)

The EUR/USD pair edged higher on Thursday, rebounding back to 1.1440 area amid renewed US dollar weakness. witnessing heavy selling after the release of US CPI data. The pair tumbled to a weekly low near 1.1380 area after the release of US CPI data, but then regain upside tractions to eliminate its daily losses. The pair was last seen trading at 1.1441, posting a 0.19% gain on a daily basis. EUR/USD stays in the negative territory earlier in the session amid surging US dollar, as the higher-than-expected US CPI report lend support to the greenback and US Treasury bond yields. Inflation in the US rose to 7.5% on a yearly basis in January and surpassed the market expectation of 7.3%, reinforcing the expectation of a more aggressive lift-off by the Fed. In Europe, ECB’s Governing Council Joachim Nagel’s hawkish comment yesterday might limit the losses for the EUR/USD pair.

For technical aspect, RSI indicator 56 figures as of writing, suggesting that the upside is more favored as the RSI stays above the midline. As for the Bollinger Bands, the price is rising from the moving average after touching it, which indicates that the pair could remain its upside traction. In conclusion, we think market will be slightly bullish as the pair might re-test the 1.1480 resistance.

Resistance: 1.1480, 1.1600

Support: 1.1360, 1.1284, 1.1132

GBPUSD (4-Hour Chart)

The pair GBP/USD advanced on Thursday, approaching to 1.3600 mark as investors assess higher-than-expected US CPI prints. The pair witnessed a dramatic turnaround in reaction to US inflation data, dropping to a fresh daily low below 1.3530 level before bouncing back. At the time of writing, the cable stays in positive territory with a 0.59% gain for the day, staging a goodish rebound amid renewed US dollar weakness. The higher CPI data from the US reinforced rate hike expectations from the Federal Reserve and triggers volatility across financial markets. On top of that, the cautious comments from Bank of England Chief Economist Huw Pill yesterday might limit the upside for the cable, as well as the renewed tensions over the Northern Ireland Protocol of the Brexit agreement.

For technical aspect, RSI indicator 62 figures as of writing, suggesting bull movement ahead. As for the Bollinger Bands, the price moves out of the upper band, so a strong trend continuation can be expected. In conclusion, we think market will be bullish as the pair is heading to test the 1.3633 resistance line. The near-term bullish bias stays intact as the GBP/USD pair trades above the 200-period SMA on the four-hour chart.

Resistance: 1.3633, 1.3739

Support: 1.3512, 1.3456, 1.3372

USDCAD (4-Hour Chart)

After previous day’s slide to 1.2670 area, the pair USD/CAD regained bullish momentum and refreshed three-day top amid higher-than-expected US CPI data. But the pair has pulled back to surrender most of its intraday’s gain as the renewed US dollar weakness dragged the pair lower. USD/CAD now remains under pressure post-US inflation report, losing 0.01% on a daily basis. However, the expectations that the Fed will announce the plan to begin tightening policy at its March meeting might limit the losses for the greenback and USD/CAD pair. On top of that, surging crude oil prices also acted as a headwind for the pair, as WTI climbs above $91 and posts a 1.36% gain on a daily basis.

For technical aspect, RSI indicator 38 figures as of writing, suggesting that that the downside is more favored as the RSI stays below the midline. As for the Bollinger Bands, the price fell out of the lower band, therefore the downside momentum should persist. In conclusion, we think market will be bearish as the pair has already broken the previous support at 1.2667, therefore additional losses could be expected for the pair.

Resistance: 1.2778, 1.2828

Support: 1.2667, 1.2575, 1.2462

Economic Data:

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Market Focus

Wall Street’s three major indexes rallied higher on Wednesday, as gains in the technology, basic materials and telecom sectors led stocks higher. In addition, the yield on the 10-year U.S. Treasury yield retreated from multi-year highs hit in the previous session, helping to stabilize global market sentiment and boosting demand for growth stocks. At the end of the market, the Dow Jones Industrial Average rose 0.86% to 35,768.06 points, the S&P 500 index gained 1.45% to 4,587.18 and the Nasdaq Composite Index added 2.08% to 14,490.37 points. On the other hand, the pan-European Stoxx 600 gained 1.7%, led by a 4.0% gain by automakers. Volkswagen was one of the index’s biggest gainers, up 6.1%, while its biggest investor, holding company Porsche, rose 8.2%

The 11 sectors of the S&P 500 performed brightly. The biggest winner was the communication services sector, which rose 2.45%, followed by the real estate, information technology and materials sectors, which rose 2.38%, 2.31% and 2.13% respectively. The best performers on the Dow were Disney, which rose 3.33%. Meanwhile, Intel was up 2.25% and Microsoft was up 2.18%. The top performers in the S&P 500 were Omnicom, Enphase Energy and Chipotle, which up 14.19%, 12.03% and 10.16% respectively. On Thursday, investors will be closely watching CPI data for clues on the Fed’s plans to raise interest rates. A surprisingly strong jobs report last week raised fears of more aggressive central bank moves.

Main Pairs Movement:

A pullback in government bond yields weighed on the dollar, which ended mixed. The U.S. 10-year Treasury yield was around 1.93%, retreat from its weekly high of 1.97%.

Sterling and the euro were unchanged in intraday trade, keeping choppy in a consolidation range. The GBP/USD trades around 1.35320, while the EUR/USD swings around 1.1420.

Commodity-related currencies were the best performers, with AUD/USD trading in the 0.7180 range, extending its three-day rally. USD/CAD also performed well, slipping to the 1.2670 area after BOC Governor Tiff Macklem made a confidence statement at the Canadian Chamber of Commerce that supply chain issues would subside soon.

Gold kept moving north and peaked $1,835.86 an ounce. Meanwhile, oil prices finally found some support after a two-day losing streak. At the end, WTI closed at $90.00 a barrel and Brent at $91.68 a barrel.

Technical Analysis:

EURUSD (4-Hour Chart)

The EUR/USD pair edged higher on Wednesday, regaining some upside tractions and rebound to 1.1440 area amid US dollar weakness. The pair dropped to a daily low in early European session, but then reversed its weakness and climbed above the 1.1440 mark heading into American session. The pair was last seen trading at 1.1436, posting a 0.19% gain on a daily basis. EUR/USD stays in the positive territory amid weaker US dollar across the board, as the falling benchmark 10-year US Treasury bond yield dragged the greenback lower. However, expectations that the Fed would adopt a more aggressive policy might limit the losses for greenback and put pressure on EUR/USD. In Europe, ECB’s Governing Council Joachim Nagel said that he support a rate hike in 2022 after ending bond purchases if the inflation picture doesn’t change by March.

For technical aspect, RSI indicator 59 figures as of writing, suggesting that the upside is more favored as the RSI stays above the midline. As for the Bollinger Bands, the price is crossing above the moving average, which indicates that the pair could remain its upside traction. In conclusion, we think market will be slightly bullish as the pair might re-test the 1.1480 resistance. But the pair is now staying in a consolidation phase.

Resistance: 1.1480, 1.1612

Support: 1.1360, 1.1284, 1.1132

GBPUSD (4-Hour Chart)

The pair GBP/USD advanced on Wednesday, surrounding by bullish momentum amid risk-on market sentiment and a sharp pullback in the US Treasury bond yields. The pair touched a fresh weekly high above 1.3585 level, then lost upside traction and surrendered some of its intraday gains. At the time of writing, the cable stays in positive territory with a 0.10% gain for the day, witnessing some fresh selling amid comments from BoE Chief Economist Huw Pill. He said that outlook for bank rate beyond coming months is uncertain, meanwhile inflation and output volatility could increase if the policy is miscalibrated. On top of that, the risk-on mood and retreating US dollar both acted as a tailwind for the cable. Market focus now shifts to US CPI data, which might influence the Fed’s monetary policy and provide trading impetus to the GBP/USD pair.

For technical aspect, RSI indicator 52 figures as of writing, showing that there is no obvious direction for the pair. As for the Bollinger Bands, the price dropped from the upper band after crossing it, so downside momentum could be expected. In conclusion, we think market will be bearish as the pair failed to break above the 1.3578 resistance. Also, traders might be reluctant to place aggressive bullish bets ahead of the US CPI report.

Resistance: 1.3578, 1.3608, 1.3739

Support: 1.3512, 1.3456, 1.3372

USDCAD (4-Hour Chart)

After previous day’s rebound to 1.2710 area, the pair USD/CAD failed to preserve its upside traction and remained under pressure today amid modest US dollar weakness. Despite bouncing back slightly in early European session, the pair saw fresh selling again and dropped towards 1.2680 mark heading into American session, now losing 0.19% on a daily basis. The sharp pullback in the US Treasury bond yields and the risk-on sentiment both decreased the demand of the safe-haven greenback. On top of that, crude oil inventories in the US tumble unexpectedly by 4.756 million barrels and pushed WTI to fresh daily highs above $89.00. But expectations that the 2015 nuclear deal will be agreed by US and Iran might weigh on crude oil prices and act as a headwind for the the commodity-linked loonie.

For technical aspect, RSI indicator 42 figures as of writing, suggesting bear movement ahead. As for the Bollinger Bands, the price fell from the moving average towards lower band, therefore the downside momentum should persist. In conclusion, we think market will be bearish as long as the 1.2778 resistance line holds. And escalating fears of Russia’s attack on Ukraine might lend support to the black gold and undermine the USD/CAD pair.

Resistance: 1.2778, 1.2843

Support: 1.2637, 1.2575, 1.2462

Economic Data: