Market Update 14/03/2022
EUR/USD
The EUR/USD pair needs to clear 1.0940 for an extended rebound. Although risk perception likely to continue to impact euro's valuation in near-term.
“Russian and Ukrainian officials are expected to hold the next round of talks at 08:30 GMT on Monday. A renewed optimism for a diplomatic solution is likely to help the euro gather strength. On the flip side, the shared currency is likely to continue to face selling pressure in case market participants price in a prolonged conflict.”
“In case EUR/USD rises above 1.0940 (Fibonacci 23.6% retracement of the latest downtrend) and starts using it as support, additional gains toward 1.0970 (50-period SMA on the four-hour chart) and 1.10 (psychological level, Fibonacci 38.2% retracement) could be witnessed.”
“1.09 (psychological level, static level) aligns as the first support before 1.0850 (static level) and 1.0800/05 which is the psychological level, March 7 low.”
Federal Open Market Committee (FOMC)
The FOMC meeting decision will be announced on 16 March. This will be the biggest key risk event on the economic calendar for this week apart from the developments in the war between Russia and Ukraine.
We've gone from the Fed will hike 25 bps to the market pushing for the Fed to hike 50 bps to Fed officials paring back those expectations to a 25-bps hike. But amid a rising inflation backdrop with key upside risks in play, perhaps we could see the Fed pull off a surprise.
USD/JPY
The push higher is an extension of the momentum from last week, in holding a firm break above 116.00. Despite some risk woes, the pair is getting a boost from both the technical aspect and a continued push higher in Treasury yields.
10-year yields are now up another 4 bps today to 2.046%. That threatens a technical push above 2% for the week so keep an eye on that in the days ahead. Going back to USD/JPY, the 118.00 level is a key area which could see gains stall unless there is a stronger catalyst for a breakout.
The highs five years ago around 118.61-66 will also be a key region to watch but as for the weekly close, it's all about the 118.00 level.
If buyers can sustain a meaningful break above that, 120.00 is the next psychological target before any further legs higher.
GoldY
Expectations that the Fed will hike interest rates by 25 bps pushed the benchmark 10-year US government bond above the 2.0% threshold. This, in turn, extended some support to the US dollar, which added to the offered tone surrounding the dollar-denominated gold.
If at all gold sellers conquer $1,945 support, the 200-SMA level of $1844 will act as a last defense of the buyers. Meanwhile, the support-turned-resistance line near $1,992 precedes the $2,000 psychological magnet to challenge the short-term recovery of XAU/USD prices.
Following that, multiple hurdles around $2,035 and $2,060 may test the bold bulls ahead of directing them to the $2,070-75 area comprising the latest high and the year 2020 top.
European equities
Positive European equities as the session gets underway:
- Eurostoxx +0.7%
- Germany DAX +1.5%
- France CAC 40 +0.6%
- UK FTSE +0.2%
- Spain IBEX +0.9%
Russian Ruble
The ministry says that it will issue payment orders to correspondent banks for making payments in foreign currency but the ability to proceed with those payments will depend on sanctions. If the foreign correspondent banks cannot make the payments, then the transaction will be conducted in Russian rubles instead.
Sources* Goldman, BBC News, FXStreet.
