Dollar bulls retrace as Ukrainian President declares 16 Feb a “National Unity Day”

Market Update

Foreign currencies selling momentum comes to a halt too soon as the president of Ukraine attempts a call for peace. The EURUSD found a near-term support at 1.1300 psychological figure as bulls attempts to recover weekly loses amid reports of Russian troops retreating from Ukrainian invasion.

De-escalating frictions between these two nations is much needed to regain bullish participation on the market. Investors seem to be momentarily relieved with President Volodymyr Zelensky calling for a National Day of Peace, although investors remain cautious since a formal resolution has not been reached so far.

The USD index shaded off its Monday gains as possibility of conflict resolution are rising. During the European session open, the index edged lower losing -0.26% and a retest of 95.70 is highly probable in the near-term as selling pressure mounts.

We do have to factor that the bearish outlook could be short-lived as bulls may attempt to price in the prospects of a rate hike in March this year. Preliminary Inflation data from the US; US PPI (MoM) and Empire state Manufacturing Index will be released early New York Session and Traders should watch out for volatility.

The GBPCHF extended gains against a weaker Swiss Franc on Tuesday morning as the Sterling gets a boost from positive average earnings for December and employment rate (January). The GBPCHF bulls remains capped with Monday high at 1.2550 and a break above that high could reinforce a bullish stance in the near-term.

European stocks opened higher early Tuesday as geopolitical tensions eases. The CAC40 bounced off the 6800 near-term support gaining +1.60%, covering a price action gap left between 15420 and 15070.00 after Monday trading session.

The EUROSTOXX 50 recovered by gaining +1.73% and the FTSE 100 rose by 0.71% after holding a 7500 near-term support.

Crude oil plummeted, with US Oil losing more than -3.01% early Tuesday breaking below $90.568 per barrel near-term support. Brent edged lower losing -2.65% as supply fears could be shrugged off by diplomatic resolution of the Ukrainian crisis.

On cryptocurrencies, Bitcoin bulls reclaims $44 000 after finding a near-term support at $41466.05 which makes up an inverted head and shoulders pattern. This could be an early sign for a bullish expansion although gains are still capped by $45 750, last week’s high.

Investors’ attention focuses on the UK inflation Numbers (CPI YoY) due for release on Wednesday morning as a Pivotal indicator to guide the interest rate cycles.