In its third week already, news is overshadowed by the Russian invasion of Ukraine. The attack, fighting, and resulting political and economic crisis enhanced commodities, particularly crude oil, natural gas, and wheat, which significantly increased in value. Meanwhile the Euro had dropped quite strongly comparative to all major currencies. The price of Crude Oil came down especially hard after the UAE gave in to American pressure and announced it would seek an increase in output from within OPEC.
The Ukrainian defense has been far more successful than the Russian leadership than anyone else anticipated, and that Russian losses may even now be exceeding 10,000 dead troops – nearly two thirds the Soviet Union’s total losses in the 10-year war in Afghanistan in the 1980s.
The NATO alliance, the EU, and associated allies have answered by making it clear they will not become involved militarily or send aircraft, dropping the chance of a full-scale wider European war breaking out, but they are sending quite sophisticated weaponry plus a stream of volunteer soldiers, which is helping to slow the Russian advance. The Russian government has just warned to target NATO weapons shipments, which could potentially lead to a clash with NATO at the Polish/Ukrainian border.
The coming week in the markets is highly likely to be dominated by the US Dollar in the Forex market and the US stock market, and a continuing prominent level of volatility. There are many economic data releases due this week:
- US PPI data (Tuesday)
- Australian Monetary Policy Meeting Minutes (Tuesday)
- US FOMC Federal Funds Rate, Statement, and Economic Projections (Wednesday)
- Canadian CPI (inflation) data (Wednesday)
- New Zealand GDP (Wednesday)
- US Retail Sales data (Wednesday)
- Australian Unemployment data (Thursday)
- Bank of England Official Bank Rate and Monetary Policy Summary (Thursday)
Major Currencies Performance and Signals
EUR/USD
The Euro has fallen significantly last week too, and it’s expected to continue the same trend due to the Russia-Ukraine conflict and sanctions imposed. We have the Fed meeting during the week so that has a huge influence on what happens next.
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 Russia-Ukraine 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
Last week the Aussie dropped as Australia got affected by the Russia-Ukraine conflict. We expect the Aussie to decrease next week but with an eye on the economic announcements.
FORECAST: SELL
Resistance: 0.7300, 0.7350, 0.7400
Support: 0.7250, 0.7200, 0.7150
USD/JPY
The US dollar rallied rather significantly during the course of the week, breaking above the ¥116.33 level, an area that had been massive resistance previously. We remail at a buy signal this week.
FORECAST: BUY
Resistance: 117.50, 118.00, 118.50
Support: 117.00, 116.50, 116.00
USD/CAD
The US dollar initially tried to rally against the Canadian dollar, showing signs of strength. The Loonie will remain biased to the upside if the geopolitical situation continues to worsen but influenced by news and oils.
FORECAST: BUY
Resistance: 1.2750, 1.2800, 1.2850
Support: 1.2700, 1.2650, 1.2600
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