It was a harsh week for the Euro as the Russian invasion of Ukraine has intensified. Broad sanctions introduce by the European Union and the United States, while penalizing for the Russian economy, have reverberated back to the Euro as economic risks skyrocket for the Eurozone.
With commodity prices soaring as energy and grain supplies appear threatened in the short-term, several other EUR-crosses produced even more dramatic losses.
Commodity prices have risen with oil and gas prices accelerating higher. Brent oil has hit 118 dollars this week before falling back to 111 dollars but it’s still a rise of 40% compared to late last year. Food and metals prices are also moving higher as Russia is a big exporter of wheat and many metals. Food prices also see spill-over from higher gas prices as it is an input in fertilizer production. The CRB food stuff index is up 20% over the past three months. Apart from being inflationary it also adds to vulnerabilities among emerging and developing countries on top of continued struggle with covid in some of these countries.
Looking forward for next week all eyes will be on the conflict and how it unfolds. Moreover, the most important economic data next will be:
- On Wednesday, the US JOLTS Job Openings and Crude Oil Inventories
- On Thursday, the EU ECB Monetary Policy will be announcing and in the US the Consumer Price Index and Unemployment Claims
- On Friday, the Canadian Employment Change and the US Prelim UoM Consumer Sentiment will be released
Major Currencies Performance and Signals
EUR/USD
The Euro has fallen dramatically last week, and it’s expected to continue the same trend due to the Russia-Ukraine conflict and sanctions imposed.
FORECAST: SELL
Resistance: 1.0950, 1.1000, 1.1050
Support: 1.0900, 1.0850, 1.0800
GBP/USD
Same situation as the Euro, the British pound has decreased as well versus the dollar because of the conflict. We expect the same trend to continue next week as the conflict intensifies.
FORECAST: SELL
Resistance: 1.3250, 1.3300, 1.3350
Support: 1.3200, 1.3150, 1.3100
AUD/USD
The Ukraine-Russia crisis had a limited impact on the Aussie, as it is considered a haven for now, even though it has united geopolitically with the EU and US against Russia. We expect the Aussie to increase next week.
FORECAST: BUY
Resistance: 0.7400, 0.7300, 0.7350
Support: 0.7350, 0.7150, 0.7100
USD/JPY
At the meeting of the FOMC on March 16th, Powell approved a hike of 0.25%. The WTI rose to $114.58 and Brent to $115.65 due to the war in Ukraine and Japan’s safety attracts investors, offsetting the US dollar.
FORECAST: BUY
Resistance: 115.00, 115.50, 116.00
Support: 114.50, 114.00, 113.50
USD/CAD
The Canadian dollar has failed to capitalize on rising oil prices and Bank of Canada’s hawkish stance due to the military conflict in Eastern Europe and its impact on sentiment. Russia-Ukraine crisis dominates trader psychology, driving safe-haven demand and limiting the appeal of riskier currencies. The Loonie will remain biased to the upside if the geopolitical situation continues to worsen.
FORECAST: BUY
Resistance: 1.2750, 1.2800, 1.2850
Support: 1.2700, 1.2650, 1.2600
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