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Market Update by Solidecn.com


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GBPUSD, the pound is consolidating near 1.31
The British pound regains lost ground during the morning session on March 8, trying to retreat from record lows since November 2021, updated the day before. The downtrend in GBP/USD is due to the rapid strengthening of the US dollar quotes, as market participants are in a hurry to hedge risks against the backdrop of rising inflation and the continuation of a special military operation of Russian troops in Ukraine. On Monday, the trading instrument came close to strong support at 1.3100, below which the British currency was last traded in November 2020.

The pound, like many other high-yielding assets, is being sold amid escalating tensions in Eastern Europe and sanctions pressure exerted by Western countries on Russia, which intensified earlier in the week after the US authorities announced that they were considering a complete ban on energy imports from Russia. The position of European countries on this issue is not unanimous, as some of them, such as Germany, say that it is currently not possible to resolve the energy issue without Russian supplies. Against this backdrop, prices for gasoline, gas and electricity continue to rise in Europe.

The macroeconomic statistics from Great Britain, released at the beginning of the week, did not have a significant impact on the dynamics of the instrument. Halifax House Prices rose by 0.5% in February, which turned out to be noticeably worse than market forecasts at the level of 1.1%. BRC Like-For-Like Retail Sales in February slowed down sharply from 8.1% to 2.7%, while the market expected a strong growth of 15.2%.

Support and resistance
Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is expanding, but at the moment it is not keeping up with the surge of "bearish" sentiment. MACD is going down preserving a stable sell signal. Stochastic keeps a steady downward direction but is already approaching its lows, which indicates the risks of oversold pound in the ultra-short term.

Resistance levels: 1.315, 1.3200, 1.3250, 1.33.
Support levels: 1.31, 1.305, 1.3, 1.296.

 

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USDTRY, Turkish lira under pressure

During the Asian session, the USDTRY pair is growing slightly, developing the "bullish" momentum that formed in early March.

Annual inflation in Turkey shows record levels, reaching 54.4% in February. Given the further escalation of tensions around Ukraine, investors fear increased price pressure in the future. Consumer prices are rising at the fastest rate in forty years, up 7.22% in February and 105% YoY. The negative dynamics are developing against the backdrop of an increase in energy tariffs and a loose monetary policy of the Central Bank of the country: officials approve a national economic program aimed at attracting investment at a low interest rate.

On Thursday, American investors expect the publication of February statistics on consumer prices in the US. It is assumed that inflation will continue its growth and may reach 8.0%, which will significantly increase pressure on the position of the US Federal Reserve on the issue of tightening monetary policy. An increase in the rate is still expected at the end of March, but global regulators may reconsider their immediate plans due to the deterioration of the geopolitical situation in the world.

Support and resistance
On the daily chart, Bollinger bands grow moderately. The price range expands, letting the "bulls" renew local highs. The MACD indicator grows, keeping a relatively strong buy signal (the histogram is above the signal line). Stochastic shows similar dynamics but is close to its highs, indicating that USD may become overbought in the ultra-short term.

Resistance levels: 14.4, 14.5, 14.6.
Support levels: 14.3, 14.1, 13.9, 13.8.

 

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EURUSD, the euro develops technical correction

The European currency shows weak growth against the US dollar during the Asian session, developing a corrective momentum and testing 1.09 for a breakout; however, further development of the "bullish" dynamics for the instrument is limited by negative market sentiment regarding the growth prospects of the eurozone economy.

Analysts pay attention to the sharp increase in quotations on commodity markets after Russian President Vladimir Putin initiated a special military operation in Ukraine. Subsequently, the authorities of the Western countries imposed unprecedented sanctions on the Russian economy, and many global companies decided to refuse cooperation with business partners from Russia. In addition, the United States announced the day before that the country was completely refusing to import Russian oil, gas and other energy carriers, which is likely to further aggravate the situation on the commodity markets. Europe, in turn, will not yet be able to completely ban Russian imports, since it is much more dependent on them. However, further restrictions are possible, and, for example, the UK said earlier in the week that it intends to cut off Russian energy supplies by the end of 2022. In addition, sanctions could backfire, causing the euro system to fall, as a freeze on Russian assets could negatively impact European banks.

This week, investors will focus on the decision of the European Central Bank (ECB) on interest rates. The meeting will take place on Thursday, March 10, and current market forecasts suggest that the regulator will not change the parameters of monetary policy. Moreover, it is quite possible that the ECB will not raise rates at all this year, given the possible slowdown in economic growth in the region.

Support and resistance
Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is changing slightly, but remains rather spacious for the current level of activity in the market. MACD is trying to reverse upwards keeping a previous sell signal (located below the signal line). Stochastic is showing similar dynamics, retreating from its lows, indicating strongly oversold EUR in the ultra-short term.

Resistance levels: 1.095, 1.1, 1.1054, 1.11.
Support levels: 1.09, 1.086, 1.08, 1.075.

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Gold, the price of gold exceeded 2K dollars per ounce

Gold prices continue to develop "bullish" dynamics, trading above the psychological level of $2000 and renewing the highs since August 2020 against the backdrop of a massive withdrawal of investors from risks due to aggravated geopolitical tensions. 

The key moment at the present time remains the export of energy carriers by the Russian Federation, including oil and gas. The US announced the day before that the country was refusing Russian imports, but does not expect that its European partners will be able to take similar measures in the near future. However, the EU is also concerned about the issue of energy security, and the UK, for example, announced its intention to stop importing Russian energy carriers before the end of the year. 

Meanwhile, oil and gas prices continue to break records in the market, threatening Western economies with a sharp increase in inflationary pressures. In addition, a group of US Congressional senators prepared a draft banning Russia from selling gold in order to counter severe restrictions against the backdrop of blocking the international reserves of the Central Bank of the Russian Federation. Secondary sanctions are expected to apply to any US companies that transact or sell the precious metal physically or electronically in Russia.

Support and resistance
Bollinger Bands on the daily chart show a steady increase. The price range is actively expanding, but it fails to catch the surge of "bullish" sentiment at the moment. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, having reached its highs, reverses into the descending plane, indicating risks of overbought gold in the ultra-short term.

Resistance levels: 2070, 2085, 2100.
Support levels: 2050, 2030, 2015, 2000.

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Brent Crude Oil, US rejection of Russian oil supports prices

Prices on the oil market continue to rise. On Monday, quotes rose above 135 but then corrected downwards. At present, the positive dynamics of the instrument have resumed against the backdrop of the US imposing a ban on the import of "black gold" from Russia. The UK authorities announced similar measures planned to be implemented by the end of this year. The EU expects to abandon Russian oil even later, as it cannot yet find an adequate replacement. According to experts from The Goldman Sachs Group Inc., last year, Russia provided 11% of the world's energy consumption, so the current actions of the US administration cause investors to fear that the shortage of "black gold" in the market will increase and push prices up.

In the medium term, the trend towards long-term growth is unlikely to change, especially since the participants of the OPEC+ agreement are not in a hurry and cannot increase oil production due to the lack of technical ability. Under these conditions, the US administration is betting on negotiations with Iran and releasing part of the strategic reserves for sale but the effectiveness of these steps to curb the growth of quotations is still doubtful. For weeks, US officials have been saying that the "nuclear deal" is close to being finalized but no deal has yet been signed. Also, after the sanctions restrictions are lifted from Iran, it will take a long time to expand production capacities and increase energy supplies to the market. The sale by consumers, led by the US, of 60M barrels of oil from reserves in the current environment may lead to a price correction but is unlikely to reverse the uptrend.

The growth dynamics of Brent Crude Oil quotations may slow down soon, as spring has begun in the main consumer countries, and at this time, the need for active use of energy carriers is traditionally reduced.

Support and resistance
The price consolidated above 125.00 (Murrey [6/8]), which allows growth to 137.50 (Murrey [7/8]), 140.00, 150.00 (Murrey [8/8]). After a reverse breakdown of 125.00, a correction to the area of 112.50 (Murrey [5/8]) is not ruled out but its potential looks limited since the indicators generally signal the continuation of the upward trend: Bollinger bands reverse upwards, and the MACD histogram grows in the positive zone.

Resistance levels: 137.5, 140, 150
Support levels: 125, 112.50, 100

 

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NZDUSD, consolidation at local highs

New Zealand dollar has been showing near zero trend against US dollar in the Asian session, consolidating around 0.6830. The day before, NZDUSD tried to show corrective growth amid some improvement in investor sentiment regarding the prospects for a diplomatic scenario for resolving the conflict in Ukraine, but so far significant risks remain.

Quotes of the asset are also supported by positive macroeconomic statistics from New Zealand and China. New Zealand Manufacturing Sales volumes corrected to 8.2% in Q4 2021 after declining by 6.6% in the previous quarter. Chinese statistics recorded a steady increase in Consumer Prices, indicating a resumption of economic recovery: in February, the figure increased by 0.6% in monthly terms and by 0.9% in annual terms, which was better than market forecasts (0.3% MoM and 0.8% YoY). In turn, the data released today turned out to be more pessimistic. Electronic Card Retail Sales in New Zealand showed a sharp decline of 7.8% in February after rising by 3% in January, although analysts had expected zero dynamics. In annual terms, sales volumes slowed down from 5.7% to 1.1%, which also turned out to be worse than preliminary market forecasts at 9.6%.

Support and resistance
Bollinger Bands on the daily chart show a steady increase. The price range is slightly narrowing, reflecting the ambiguous dynamics of trading in the short term. MACD is trying to reverse downwards, forming a weak sell signal (the histogram is trying to consolidate below the signal line). Stochastic shows a more confident decline, signaling in favor of the development of corrective dynamics in the nearest future.

Resistance levels: 0.684, 0.6866, 0.69, 0.6924.
Support levels: 0.6795, 0.6766, 0.6732, 0.67.

 

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Gold Settles Near 2,000 USD

Volatility remains highly elevated, especially in commodities.
Gold advanced 1% on Thursday, jumping back above the psychological 2,000 USD as the war in Ukraine and inflation concerns support the bullion.

Danske Bank said in a note that it does not expect the Russia-Ukraine conflict to spread to other countries and sees commodity prices broadly moderating over the next six months. 

"We expect the Ukrainian and Russian leaders to agree on a truce eventually. However, we also believe that the Ukrainian government will be forced to painful concessions in the absence of direct military intervention by the West/NATO," it said.

Later today, the US CPI inflation for February is due, seen rising further to 7.9% yearly, while the core inflation is expected to accelerate to 6.4%. As a result, the Fed will be forced to raise rates faster as inflation rises, potentially moving beyond 10% on soaring commodities.

The short-term support could be seen at yesterday/today's lows near 1,975 USD. As long as the metal trades above that, the outlook seems bullish, likely targeting the current cycle highs at 2,060 USD.

However, if markets receive more optimistic news from the diplomatic talks between Russia and Ukraine, profit-taking could bring gold back toward 1,900 USD.

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GBPUSD, consolidation near record lows

At the same time, activity on the market remains quite low ahead of the publication of a large block of the UK macroeconomic statistics. Today, traders focus on the January data on GDP and industrial production dynamics. It is assumed that the economy of the United Kingdom may show growth of 0.2% after declining by a similar amount last month. Also, during the day, there will be February estimates of GDP growth from the National Institute of Economic and Social Research (NIESR) and a forecast for the dynamics of consumer inflation. The United States will release the index of consumer confidence from the University of Michigan for March (preliminary forecasts suggest a drop in values from 62.8 to 61.3 points).

Resistance levels: 1.31, 1.315, 1.32, 1.325.
Support levels: 1.305, 1.3, 1.296, 1.29.

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USDCHF, the US dollar ends the week with a strong rise

Thus, the regulator decided to keep the key interest rate unchanged at 0% but announced a more rapid curtailment of the current quantitative easing (QE) program. Key interest rates will remain at their current levels until inflation in the euro area reaches the target level of 2% (in February, the indicator showed an increase to 5.8% against 5.1% a month earlier, becoming a record for the entire history of observations). Therefore, cardinal changes should be expected already in the third quarter of this year. Also, the agency will reduce APP bond purchases to 30B euros in May and then to 20B euros in June, while PEPP asset buybacks will be slower than in the previous quarter and, as planned, completed by the end of March. Analysts believe that the current decisions of the European financial authorities are aimed at maintaining flexibility in the face of market uncertainty caused by the launch of a special military operation of Russian troops in Ukraine.

Support and resistance
Resistance levels: 0.93, 0.9341, 0.9372, 0.94.
Support levels: 0.9271, 0.925, 0.922, 0.92.

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GBPJPY Tests 200 DMA

Traders were trying to remain optimistic Friday, buying riskier assets such as stocks and selling JPY crosses, pushing GBPJPY toward its 200-day moving average at 153.3. If that level (the green line) is broken to the upside, we could see another leg higher, targeting the 50-day moving average (the purple line) near 155.25.

Alternatively, if traders sell the current rally, the decline could be bought near the support zone at 152.50. The short-term outlook will likely depend on the developments coming from Ukraine. The USDJPY pair has already broken to the upside from its multi-month triangle pattern, soaring to the highest level since 2017. Therefore, we might see further buying pressure in the JPY crosses.

The outlook seems neutral from the long-term perspective as the cross has been stuck in a narrow range between 158 and 149 (as shown on the chart with blue horizontal lines). 

Earlier in the day, the Office for National Statistics showed the UK economy bounced back strongly in January after taking a hit from the Omicron variant and Plan B restrictions. GDP grew 0.8% after contracting by 0.2% in December, coming in comfortably ahead of expectations of 0.1% growth. This leaves GDP 0.8% above pre-pandemic February 2020 levels. 

In the initial reaction, sterling failed to rally after the data, but sentiment improved ahead of the US session, strengthening the Pound.

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CAC 40, EU markets started to decline again

CAC 40 continued its decline, trading at 6212 at the moment. Investors are focused on both economic and political aspects.

First of all, the hope for an early ceasefire in Ukraine was leveled after the fruitless talks between the foreign ministers of Russia and Ukraine, which took place the day before in Turkey, which means that geopolitical tensions will continue to put pressure on the economies of states directly or indirectly involved in this conflict.

The second reason for the downtrend of CAC 40 quotes is the forecasts of a slowdown in the economies of the eurozone countries, which are increasingly heard from reputable analysts. Experts from the investment bank Goldman Sachs lowered their estimate of economic growth in the region for 2022 from 3.9% to 2.5%. The main reasons for the slowdown are high energy prices and the failure of supply chains of goods due to sanctions against the Russian Federation. In addition, investors are also disappointed by the indecision of the European Central Bank (ECB), which left all parameters of monetary policy unchanged, without reacting in any way to the worsening economic environment.

The growth leaders in the index are Vivendi SA (+1.47%), Carrefour SE (+1.02%), Thales Group SA (+0.95%), Orange SA (+0.57%).

Among the leaders of the decline are Credit Agricole SA (-7.45%), Stellantis NV (-6.95%), Alstom SA (-6.19%), Societe Generale SA (-5.68%).

Support and resistance
The quotes of the asset are traded as part of a global downtrend, declining towards the lows of the beginning of the week. Technical indicators maintain an active sell signal: the range of EMA fluctuations on the Alligator indicator is expanding again in the direction of decline, and the histogram of the AO oscillator is trading deep in the sales zone.

Support levels: 6036, 5747.
Resistance levels: 6382, 6700.

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EURUSD, the euro is testing 1.09

 

The European currency shows mixed dynamics of trading against the US dollar during the Asian session, consolidating near 1.09 in anticipation of new movement drivers.

EURUSD ended last week's trading with an active two-day decline, which almost completely leveled the instrument's attempt to grow on Tuesday and Wednesday. Significant support for the euro was provided by the rhetoric of the European Central Bank (ECB), which announced the curtailment of the quantitative easing (QE) program sooner than expected. Asset purchases will be slowed down from 40 billion euros in April to 30 billion euros in May and to 20 billion euros in June, although earlier it was planned to gradually reduce from 40 billion euros to 20 billion euros by October. The "hawkish" rhetoric of European officials means that before the end of the year, the regulator will be able to get additional space to start a full-fledged tightening of monetary policy through an increase in interest rates, which will remain at current values until inflation reaches the target value of 2%.

In turn, pressure on the euro continues as the conflict escalates in Ukraine, where Russian troops continue to conduct a special military operation. Western countries are introducing more and more new sanctions against businesses and individuals. US authorities have already banned the import of oil, gas and other energy products from Russia, and Europe, in turn, being more dependent on Russian exports, is likely to act gradually. The European Commission has already presented a project for an accelerated phase-out of Russian energy carriers, under which the EU's need for gas from Russia will be reduced by two-thirds by the end of 2022. At the moment, the EU imports 90% of "blue fuel", about 45% of which is supplied by the Russian Federation.

Support and resistance
Bollinger Bands in D1 chart demonstrate active decrease. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is declining keeping a weak sell signal. Stochastic shows more confident negative dynamics, but at the moment it is rapidly approaching its low, indicating the risks of EUR being oversold in the ultra-short term.

Resistance levels: 1.0957, 1.1, 1.1054, 1.11.
Support levels: 1.09, 1.086, 1.08, 1.0767.

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NZDUSD, the instrument develops a corrective impetus

The New Zealand dollar starts the week with a slight decline against the US currency, trying to consolidate below the psychological support level at around 0.68.

The pressure on the position of the instrument is exerted by the continuing demand for safe assets as the geopolitical situation in Europe worsens. In addition, the market is alarmed by the sharp rise in energy prices around the world, as well as the likelihood of further deterioration of the situation as Western countries abandon Russian oil and gas. Additional support for the US currency is provided by the expectations of the launch of a cycle of tightening monetary policy by the US Federal Reserve this week. The regulator’s meeting will take place on Wednesday, and current market forecasts suggest that the rate will be increased by 25 basis points.

Published on Friday, macroeconomic statistics from New Zealand and the US were mixed. Thus, the Manufacturing PMI of New Zealand in February showed a slight increase from 52.3 to 53.6 points, which fell short of analysts’ forecasts at the level of 54.5 points. At the same time, the Food Price Index unexpectedly fell by 0.1% in February after rising by 2.7% in January. The market expected the index to slow down to 1.3%. Data from the US, in turn, disappointed investors with a noticeable drop in Consumer Confidence Index from the University of Michigan in March from 62.8 to 59.7 points, while the market expected a decline to only 61.4 points.

Support and resistance
Bollinger Bands on the daily chart show a weak increase: the price range is narrowing, reflecting the emergence of multidirectional dynamics in the short term. MACD is falling, keeping a fairly strong sell signal (the histogram is below the signal line). Stochastic shows an even more active decline, but is located in close proximity to its lows, which indicates the risks of the New Zealand dollar being oversold in the nearest time intervals.

Resistance levels: 0.6795, 0.684, 0.6866, 0.69.
Support levels: 0.6766, 0.6732, 0.67, 0.665.

 

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GBPUSD, the downtrend increases

The British pound continues to decline, reacting to negative inflation statistics and increased geopolitical tensions in the world, currently trading around 1.303.

GBPUSD remains under pressure ahead of the Bank of England interest rate meeting scheduled for March 17, as well as a significant increase in consumer prices and energy tariffs, as a result of which households will be forced to reconsider their spending. Based on the latest data, official inflation in the United Kingdom for January was 5.5% in annual terms, the highest value in the last 30 years. According to a study by the analytical company Resolution Foundation, against the backdrop of negative dynamics, the additional average spending per household will increase by 1 thousand pounds in the next financial year.

The British pound may be supported by the fact that in January the national economy has been actively recovering over the past seven months, exceeding the figures before the start of the coronavirus pandemic: GDP rose by 0.8% from 0.2% in December, when the Omicron strain was spreading. Compared to February 2020, Manufacturing Production increased by 0.8%, with growth observed in all sectors of the economy. This data may push the Bank of England to raise interest rates to fight inflation, as a result of which GBP/USD may correct to the levels of 1.3200 and 1.3400 in the medium term.

Support and resistance
The long-term trend in GBP/USD is downward. Last week, market participants managed to fix the price below the support level of 1.3065, which allows considering new sales with the target of 1.2905. The level of 1.32 turns into resistance, and the trend boundary shifts to 1.3400.

As part of the medium-term downtrend, all targets were reached last week. At the moment, market participants are testing target zone 2 (1.306–1.3026), which currently acts as support and holding which will allow the rate to go into a correction with the maximum possible target in the area of key resistance at 1.3387–1.3353.

Resistance levels: 1.32, 1.34, 1.351.
Support levels: 1.2905, 1.272.

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Aussie Falls as Sentiment Improves

The AUDUSD pair was down 0.7% today as US yields advanced to new cycle highs, strengthening the USD against some of its counterparts.
The Australian dollar has behaved rather strangely during the Russia-Ukraine war as it rallied on lousy news and declined on good news. Usually, it's the other way around with the Aussie - it tends to strengthen on positive news and decline on negative news. 

Nevertheless, the AUDUSD pair has failed to stay above the 200-day moving average (the green line) as the Fed is about to start raising rates this week. And because inflation seems unstoppable, the central bank will likely increase the pace of rate increases throughout the rest of the year.

Therefore, the next support could be at the 50-day moving average (the purple line) at around 0.72, and if the Aussie breaks below it, further declines toward 0.71 could occur.

The MACD indicator is about to send a bearish signal on the daily chart, likely supporting the bearish bias in the following days.

Alternatively, the resistance for the near future is at 0.73, where previous highs are converged with the 200-day average. Once the Aussie jumps above that level, it might continue higher toward March highs at 0.7445.

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USDJPY, US dollar hits highs since 2017

The US dollar is developing an upward impetus against the Japanese yen in Asian trading, renewing record highs since January 2017.

Noticeable support for the instrument is provided by the meeting of the US Fed scheduled for Wednesday, within which a cycle of raising interest rates is likely to begin. Tomorrow, the rate could be adjusted by more than 25 basis points. US inflation reached a new 40-year high in February, with the CPI up from 0.6% to 0.8% on a monthly basis and from 7.5% to 7.9% on an annualized basis, according to data released last week. The increase in oil prices to the peak values of 2008 also contributes to the negative dynamics, which in the future will lead to a reduction in household spending on other goods.

The Bank of Japan in this sense is far behind not only the US Federal Reserve, but also the European Central Bank (ECB), preferring to refrain from reducing economic stimulus and believing that tightening monetary policy in the current environment can do more harm to the economy than good, which has significant pressure on the positions of the Japanese currency. However, the issue of inflation in the country is not so acute, and therefore the policy of the regulator is quite expected and sufficiently transparent.

Tomorrow, investors expect the publication of February data on the dynamics of Imports and Exports, as well as January statistics on Industrial Production from Japan. Export forecasts are quite optimistic and suggest a sharp rise of 21% in February after rising only 9.6% in the previous month. Imports over the same period may slow down from 39.6% to 28%, which should favorably affect the dynamics of the trade balance.

Support and resistance
Bollinger Bands on the daily chart show a steady increase. The price range is actively expanding, but it fails to catch the surge of "bullish" sentiment at the moment. MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, having approached its highs, is reversing into a horizontal plane, indicating significant risks of overbought USD in the ultra-short term.

  • Resistance levels: 118.43, 119, 119.5, 120.
  • Support levels: 118.00, 117.50, 117.00, 116.60.

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Gold prices are actively corrected

Gold prices are developing a corrective downtrend during the morning session, updating local lows from March 4 and rapidly retreating from their record highs, the growth to which was provoked by Russia's special military operation in Ukraine. Now, the demand for risky assets is gradually recovering, as traders are counting on significant progress in the negotiation process and some stabilization of the global economy if, after a truce is reached, part of the blocking sanctions against the Russian Federation are lifted.

In turn, the development of "bearish" trend in the asset is supported by the strengthening of the US dollar on the eve of the US Federal Reserve meeting scheduled for Wednesday. Current market forecasts suggest a 25 basis point hike in interest rates, marking the welcome start of a monetary policy adjustment cycle. In the latest commentary by the Chairman of the department, Jerome Powell, he mentioned multiple increases in rates this year, taking into account rising inflation, which, in turn, will become a catalyst for strengthening the national currency. At the same time, the yield on 10-year US Treasuries has already risen by 13 basis points, hitting a 32-month high, and the UK gold rate has corrected to its highest level since 2018.

As for macroeconomic statistics from China, it turned out to be positive: Retail Sales in February increased by 6.7% after rising by 1.7% in the previous month, while analysts had expected a 3.0% increase.

  • Resistance levels: 1952, 1974, 2000, 2015.
  • Support levels: 1918, 1900, 1877, 1860.

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Brent Crude Oil, quotes have renewed local lows

During the Asian session, Brent Crude Oil prices are falling, renewing local lows of the beginning of the month and testing the level of 99.00 for a breakdown. The instrument has lost 23% in value since March 7, after hitting a 14-year high at 139.13.

Investors are gradually returning to risk as the geopolitical situation somewhat stabilizes, but in general, the situation remains quite tense: Russian troops continue to conduct a special military operation on the territory of Ukraine for the third week already. Against this background, sanctions pressure on the Russian Federation from Western countries leads to increased risks for the global economy. Last week, the Russian authorities demanded from the United States guarantees that the economic restrictions imposed would not impede full-fledged trade, economic, and investment cooperation between Moscow and Tehran in the restoration of the agreement on the Iranian nuclear program. And yet, after a long period filled with exclusively negative reports, investors hope that significant progress will be made in the negotiations between the Russian and Ukrainian delegations.

The focus of the market is also on the decision of the US Federal Reserve on interest rates, which will be announced on Wednesday evening. Analysts forecast an increase of at least 25 basis points. Still, investors are also awaiting comments from the head of the regulator, Jerome Powell, who may announce specific steps and dates for adjusting monetary policy parameters to curb inflationary pressure in the country soon.

Also, traders monitor the further development of the coronavirus epidemic in China, the world's largest importer of crude oil and the second-largest consumer after the United States. So, the authorities decided to quarantine the city of Shenzhen amid an increase in the incidence of COVID-19 (60 cases of infection were detected). At the moment, all commercial organizations, except for food and fuel, are required to either suspend work or transfer employees to a remote mode.

  • Resistance levels: 102.8, 105, 108.18, 112.
  • Support levels: 100, 96, 93, 91.00.

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AUDUSD, the pair is under pressure from the development of the pandemic in China

The AUD/USD pair started the current week with a decrease and is currently trading around 0.7170. The Australian currency was under pressure from two negative factors: a new wave of the coronavirus pandemic in China and a wait-and-see position of the Reserve Bank of Australia (RBA) regarding the adjustment of national monetary policy parameters.

Investors fear a decline in industrial production in China due to the introduction of new restrictive measures and a reduction in demand for raw materials, including Australian coal. The industrial center of Shenzhen is already under quarantine, but the situation could worsen significantly since, according to experts, significant herd immunity has not yet been formed in the country. Today's positive Chinese data on industrial production (growth by 7.5%) and retail sales (growth by 6.7%) in China stopped the fall of the AUD/USD quotes, but the negative dynamics is likely to resume soon, as indicators do not yet take into account the impact of a new increase in the incidence. Investors were also disappointed by the minutes of the last meeting of the RBA. Officials have reaffirmed their wait-and-see attitude towards raising rates even in the Ukrainian crisis, which is pushing global inflation up. The country's financial authorities believe that it is still premature to say that inflation will remain in the corridor of 2–3%, and wage growth is still insufficient for drastic measures on the part of the department.

The position of the American currency also cannot be called stable. Bidders are ready for the first rate increase this week by 0.25% but what the next steps of the regulator will be is unknown. On the one hand, he must fight rising inflation. On the other hand, he is afraid to slow down the recovery of the economy, which remains vulnerable due to the current geopolitical crisis. The gradual correction of indicators will likely continue, but experts doubt these measures will lead to a serious slowdown in price growth.

  • Resistance levels: 0.7263, 0.7385, 0.7446.
  • Support levels: 0.7141, 0.7080, 0.7019.

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GBPUSD, the pound is attempting a corrective growth

The British pound traded higher against the US currency during the morning session, building on the upside signal generated the day before when GBPUSD again tried to retreat from its record lows since November 2020.

The pound is supported by an optimistic macroeconomic background from the UK, which was supplemented yesterday by strong data on the labor market. The ILO Unemployment Rate in January showed a decrease from 4.1% to 3.9%, which was better than analysts' forecasts of 4%, and the Claimant Count in February fell by 48.1 thousand after a decrease of 31.9 thousand a month earlier. Average Earnings excluding Bonus in January accelerated from 3.7% to 3.8% 3MoY. Including bonus, the indicator showed an increase of 4.8%, which also turned out to be better than market expectations at the level of 4.6%.

The positive dynamics of indicators allow traders to assume that tomorrow, when the Bank of England meets, the interest rate will be raised for the third time in a row to 0.75%. The "hawkish" rhetoric of the regulator's Governor Andrew Bailey or a 50 basis point correction could stabilize the pound at its current low levels and allow quotations to move higher. The US Federal Reserve is meeting today, and current market forecasts also suggest a tightening of monetary policy and a 25 basis point hike in rates.

Resistance levels: 1.31, 1.315, 1.32, 1.325.
Support levels: 1.3, 1.296, 1.29, 1.285.

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