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Market Update
Markets remains sensitive to geopolitical uncertainty as tensions renew between the West and Russia regarding Ukraine. Russia has recognized two breakaway eastern Ukraine regions and reports have confirmed Russian “peace keeping” troops entering the region. However, risk appetite remains awakened with hawkish remarks from central bankers.
The US Dollar retreated from Monday high as bulls lost steam towards 95.25. A failure to break above 96.50 near-term resistance can cause the Dollar to remain rangebound. The 95.70 remains a critical pivot to determine the outlook of the Dollar in the near-term.
Early this morning the EURJPY pair rallied as bulls found a near-term support at 129.50. The EUR got a boost from positive Italian Consumer Price Index for January and a strong reading on German Business Climate for February.
Optimism of a rate hike from ECB is slowly getting renewed as the European economy responds to the rising inflationary pressure. EURJPY faces a near-term resistance at 130.400 and a breach above this area could renew bullish appetite in the near-term.
During European session, NZDJPY extended gains ahead of New Zealand interest rates scheduled for late New York session. Bears lost control at 76.70 before the market changed direction to the upside. A break above 77.538 could reinforce bullish momentum as the Japanese yen remains weak.
The BoJ remains steady and continue with a dovish stance on interest rates while the economy slows. Japanese CPI (YoY) was weaker and Japanese Yen lost gains against other currencies.
The GBPCHF gave in its early morning gains as bullish momentum quickly faded after worse-than-expected CBI industrial Trend Orders. A failure to break below a near-term support at 1.2440 could see bulls attempting to change the outlook, although gains remain capped by 1.24800 resistance.
USDJPY experienced a price correction as JPY indicates a slowing economy. The pair has found a near-term support at 114.50 and the current price movement remains challenged with 115.00 psychological resistance. A break above that area could change market outlook to bullish in the near-term.
Traders should pay close attention to Purchasing Managers index data for February and CB Consumer Confidence as they remain pivotal in guiding FOMC interest rate cycle scheduled for March.
European stocks surged higher during European session Open with FTSE rising 1.20%. The market bears failed to break below 7400 near-term support and with bulls sponsoring the current movement they remain challenged with a near-term barrier at 7570.00.
CAC rose 1.53% and the index is back above a critical support at 6700. The index has breached 6800 area and upside gains are capped with geopolitical tensions between Ukraine and Russia.
US stocks will be opening later today from a long weekend and Traders should anticipate huge volatility.
Gold traded lower during European session after hitting a fresh high at 1914.65 area. The yellow metal remains bullish while underpinned by rising inflationary pressures globally. The current trend could take a corrective pattern as FOMC members renews sentiments of aggressive rate hikes.
