Solid ECN | Professional Market Analysis | *Video*

[SOLIDECN]

GBPUSD, the market is waiting for the decision of the Bank of England​

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The UK currency is in the stage of a local upward correction in anticipation of the decision of the Bank of England on the interest rate, which will be taken today at 14:00 (GMT+2). Now the GBPUSD pair is trading around 1.3156.

The vast majority of currency market analysts assume that the regulator will raise the interest rate for the third time by 25 basis points and bring it to 0.75% amid rising inflation and a negative situation on the national labor market. Official macroeconomic statistics showed the highest increase in consumer prices since 1992, which amounted to 5.5% for January compared to the same period in 2021. The volume of asset buybacks is projected at the same level of 875B pounds. According to analysts, today's possible increase in the rate is only one of the stages of a large-scale program, under which the rate could be increased to 1.50% by the end of 2022.

As for the US dollar, all the expectations of investors and analysts have completely justified: the US Federal Reserve raised the interest rate from 0.25% to 0.50%, but this had almost no effect on the dollar quotes. Moreover, the US currency fell slightly and is now trading around 98.300 points in the index. In an accompanying statement, the regulator noted that due to the military conflict in Ukraine, inflation would be difficult to contain, and soon the figure may increase again. Despite this, the US financial authorities intend to continue to influence inflationary pressures by raising rates, which will eventually lead to achieving the target value of 2%.

Resistance levels: 1.3266, 1.36.
Support levels: 1.2997, 1.28.​

 

[SOLIDECN]

Crude Oil, possible supply disruptions push the price up​

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During the Asian session, prices for WTI Crude Oil are growing moderately, developing the "bullish" momentum formed last Wednesday, when the instrument was trading near local lows since February 25. By the end of the week, "black gold" quotes are trying to consolidate above the psychological level of 100 dollars per barrel, reacting to the uncertainty about oil supplies from Russia.

Meanwhile, Russian troops continue to conduct a special operation on the territory of Ukraine, which has already met with sharp opposition from the Western world. Countries and private companies are refusing to buy Russian energy resources, and the current situation is destabilizing the balance of supply and demand in the market even more. According to the International Energy Agency forecast, in April, Russia may reduce production by 3M barrels per day to 8.6M barrels amid the refusal of buyers from exports amid economic restrictions imposed on the country. Currently, only Saudi Arabia and the United Arab Emirates have the opportunity to increase production to compensate for supply problems.

Pressure on oil quotes in the middle of the week was exerted by a report published by the US Department of Energy on the dynamics of energy stocks for the week of March 11. Contrary to forecasts of a further moderate decline of 1.375M barrels, the figure rose by 4.345M. At the same time, gasoline inventories fell more than expected, while US oil production remained unchanged. The increase in the indicator is likely associated with the decision of President Joe Biden to release part of the strategic reserves of "black gold" to reduce prices, but US oil reserves are not unlimited. According to analysts, they can only last for one month.

Resistance levels: 105, 107.67, 110, 114.51.
Support levels: 103, 100, 96.00, 93.97.​

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[SOLIDECN]

Kiwi Approaches 200-day Average​

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The NZDUSD pair, also known as the Kiwi, was up for the third day, gaining 0.2% ahead of the US session and testing the major resistance zone near 0.6850. In the US, data showed that industrial production fell to 0.5% in February, down from 1.4% in January. At the same time, capacity utilization ticked higher from 77.3% to 77.6%, but below expectations of 77.8%.

Additionally, initial jobless claims improved from 229,000 to 214,000, setting the 4-week average at 223,000 from 231,750 previously. Continuing claims also fell to 1.419 million from 1.49 million a week ago.

As previously said, the Kiwi is trying to breach the powerful resistance at 0.6850. If bulls are successful, we can see a quick run toward the 200-day average (the green line) at 0.6915. On the downside, the support is seen at the 50-day moving average (the purple line) at around 0.6730, before another strong demand zone of previous lows near 0.67.

Yesterday's US rate hike failed to spur any demand for the greenback as investors continue to assess the situation in Ukraine as the primary driver of the financial markets.​

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[SOLIDECN]

AUDUSD, consolidation near 0.74​

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Last week, AUDUSD showed one of the most significant gains in the past few months, quickly recouping last Monday's losses that led to new local lows since the end of February. Even the results of the two-day meeting of the US Federal Reserve, where the interest rate was raised by 25 basis points to 0.50%, did not put pressure on the quotes. The regulator's decision marked the launch of a rate adjustment cycle in 2022, which, according to preliminary estimates, could consist of seven rate hikes. In addition, the Fed announced a reduction in its balance sheet, which is currently estimated at nearly 9 trillion dollars, in the next few months.

The rhetoric of US Federal Reserve Chairman Jerome Powell this week, as well as the US President Joe Biden's meeting with North Atlantic Treaty Organization allies to discuss the possibility of a diplomatic solution to the conflict in Ukraine, will be crucial for the short-term dynamics of AUD/USD. In addition, investors will be watching the rhetoric of the People's Bank of China on the interest rate. Today, the country's financial authorities have left the base lending rate at 3.7%, despite the development of the pandemic in the region. Thus, Australia, as a leading exporter to China, may face an increase in buying activity if the local regulator adjusts the figure.

The macroeconomic statistics released on Friday from the US contributed to additional "bullish" dynamics for the Australian dollar. US Existing Home Sales in February showed a decline of 7.2% after rising 6.6% a month earlier, although analysts had expected a decline of 1.0%.

Resistance levels: 0.744, 0.75, 0.755, 0.76.
Support levels: 0.7366, 0.73, 0.725, 0.7164.​

 

[SOLIDECN]

Brent Crude Oil, oil prices have returned to growth​

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The quotes returned to positive dynamics at the end of last week after renewing local lows on February 25 in response to a further deterioration in the situation around Ukraine. Russian troops have been carrying out a special military operation since the end of February, resulting in unprecedented sanctions pressure from Western countries. Thus, the US authorities earlier announced that they were refusing to import Russian energy carriers, but Europe, due to the close connection of energy systems, could not fully support such a ban since it is 40% dependent on Russian gas supplies. Nevertheless, several European countries intend to minimize supplies until the end of this year. In particular, the authorities of the Baltic countries insist on the introduction of a complete ban, but Germany refuses to support the embargo. Analysts do not rule out that Europe will also try to lobby for a complete ban on Russian energy imports, but the position of France, which currently chairs the European Union, may play a key role here.

The situation in the Middle East also remains alarming, where Saudi Arabia reports new attacks by the Yemeni Houthis on oil facilities. Finally, experts are concerned about the surge in the incidence of COVID-19 in China, which is one of the main consumers of oil and petroleum products in the world. The country's authorities adhere to a zero-tolerance policy against the coronavirus. Therefore, they introduce large-scale restrictions in response to even isolated cases of infection.​

• Resistance levels: 112, 115, 118, 121.​
• Support levels: 108, 105, 102, 100.​

 

[SOLIDECN]

Gold, correction to the global uptrend​

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Traditionally, gold is a safe haven asset during geopolitical tensions, so at the moment traders prefer to close positions on the stock market and look for more reliable assets to invest in order to minimize risks. The growth of the XAU/USD pair is also facilitated by the limited supply of raw materials that arose as a result of sanctions against the Russian economy by Western states. For example, today aluminum has risen in price by 5% after Australia banned the supply of alumina, aluminum ores and bauxite to Russia. This has become another threat to the global supply of metal, which will contribute to global inflation.

Meanwhile, the rise in steel prices reinforces investors' concerns about the shortage of alloys that are used in production. Steel mills across Europe are reducing working hours due to higher electricity tariffs. A negative trend is already being noted in Spain and Germany, they are beginning to slow down or completely stop operations, as rising costs make it unstable even though steel prices are at record levels.

The de-escalation of tensions in Ukraine is likely to stop the upward dynamics of the XAU/USD pair for some time, but the consequences of the current crisis will keep metal prices at a high level near the level of 2K dollars per troy ounce for a long time.

Resistance levels: 1950, 2010, 2060.
Support levels: 1908, 1872, 1849.​

 

[SOLIDECN]

EURUSD, the euro develops a corrective decline​

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The European currency shows a moderate decline against the US dollar during the Asian session, again testing 1.1000 for a breakdown. Demand for risky assets remains quite low at the beginning of this week, as the growing geopolitical tensions keep investors from opening new trading positions.

At the moment, Russian troops continue to conduct a special military operation on the territory of Ukraine, which causes a reaction from Western states regarding new restrictions. This week the EU is preparing to consider the introduction of a new, fifth package of sanctions against the Russian economy. Today, a meeting of representatives of the EU secretaries of defense and foreign affairs will be held in Brussels, where the main topic of the agenda will be the situation in Ukraine. EU High Representative for Foreign Affairs and Security Policy Josep Borrell will present a report on possible scenarios for further developments in the situation.

Among other things, the new measures may include the introduction of a moratorium on the import of Russian oil and gas, similar to the one currently in force in the United States. However, the position of European states on this matter is still extremely ambiguous. Given high energy prices, the withdrawal of Russian resources could trigger further price pressures. In particular, Germany, which fears for its energy security, opposes the embargo.

The macroeconomic statistics from Germany published today did not have a noticeable impact on the dynamics of the instrument. Thus, the Producer Price Index in February slowed down growth from 2.2% to 1.4%, which turned out to be worse than the market's expectations of an increase of 1.7%. On an annualized basis, industrial inflation accelerated from 25% to 25.9%, only slightly falling short of the expected 26.1%.

Resistance levels: 1.1051, 1.11, 1.115, 1.1185.
Support levels: 1.1000, 1.0957, 1.09, 1.086.​

 

[SOLIDECN]

GBPUSD, the pound is updating local highs

The British pound is trading with the uptrend against the US currency during the morning session, updating local highs from March 4.

Eurozone countries found themselves in a vulnerable position due to the developing crisis around Ukraine. The European authorities are preparing a new package of sanctions against the Russian economy, which may include significant restrictions or even a complete embargo on energy imports. This will lead to explosive inflation in commodity markets and call into question the ability to ensure energy security. Undoubtedly, high oil and gas prices will have an extremely negative impact on the UK economy, but London today is much less dependent on imports from the Russian Federation, and therefore joined the embargo initiated by the United States earlier.

Resistance levels: 1.33, 1.335, 1.3435, 1.35.
Support levels: 1.325, 1.32, 1.31, 1.305.

 

[SOLIDECN]

Gold, a backlash against the "hawkish" rhetoric of the US Fed​

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The official said that the regulator is ready to raise the rate immediately by 50 basis points at one or more of the next meetings and will soon launch a program to reduce the balance sheet, according to the latest estimates, reaching 9T dollars. Also, The Goldman Sachs Group Inc. analysts forecast two adjustments of 50 basis points at once from the next meeting and then four increases of 25 basis points before the end of the year. The "hawkish" tone of Powell's remarks spurred US bonds higher and affected the bond market, with the US dollar index turning sideways around 98.500 amid heightened investor attention to risky assets and the yield on 10-year US Treasury bonds reached 2.81%. Against this background, gold has expectedly declined, although the demand for shelter assets has generally remained very high in recent days.

The metal is supported by the expectations of new packages of EU sanctions against the Russian economy. This week, EU leaders will meet to discuss the fifth package of restrictive measures that could include a broader ban on Russian energy imports. It is worth noting that there is no single position on this issue: Germany opposes a complete ban while not excluding the possibility of finding alternatives.

Resistance levels: 1930, 1952.5, 1974.2, 2000.
Support levels: 1900, 1877.6, 1860, 1840.​

 

[SOLIDECN]

Brent Crude Oil, "black gold" returned to growth

Brent Crude Oil quotes continue to recover after a significant correction last week and are currently in the 116.70 area.

Fears that China will seriously reduce energy consumption due to a new outbreak of the coronavirus pandemic have not yet been justified, and peace negotiations between Russia and Ukraine have stalled, which again brought price support factors back to the fore. The possibility of new sanctions against Russian oil supplies and the lack of progress on the "nuclear deal" with Iran, which the market has been waiting for several weeks, is acting as a catalyst for the demand that is currently impossible to cover since the largest producers, Saudi Arabia and the United Arab Emirates, are not able to quickly increase production. Also, the oil infrastructure of Saudi Arabia is periodically attacked by the Yemeni Houthis, which creates problems for the export of "black gold" to the market.

Among the short-term factors for the growth of the trading instrument, the American Petroleum Institute (API) report published yesterday recorded a reduction in US inventories by 4.280M barrels at once instead of the expected growth by 0.025M barrels and a reduction in oil exports via the Caspian pipeline by 1.0M barrels per days due to damage requiring repair. The likely refusal of the EU countries to impose an embargo on supplies from Russia cannot seriously slow down the growth of quotations. It is already being taken into account by the market, as the leader of the European economy, Germany, opposes such measures.

Resistance levels: 117, 125, 132.
Support levels: 110.7, 100, 92.8.​

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[SOLIDECN]

USDCHF, trading within the global ascending channel

The Swiss currency is slowly losing its strong position against the US dollar, trading around 0.9344.

Yesterday, the President of the country, Ignazio Cassis, addressed the nation with the rationale for the country's refusal of a neutral position and the imposition of sanctions against the Russian Federation against the backdrop of a special military operation in Ukraine. According to Cassis, this decision could have negative consequences for the economy, including higher utility prices due to high dependence on Russian gas and oil, accelerated inflation due to disruptions in supply chains, and retaliatory sanctions from the Russian Federation. Finally, the franc will remain a shelter asset, which will harm exports.

On the global chart of the asset, the price is moving within the global ascending channel, approaching the resistance line. Technical indicators keep a stable buy signal: fast EMAs on the Alligator indicator are above the signal line, and the AO oscillator histogram trades in the buying zone.

Resistance levels: 0.937, 0.95.
Support levels: 0.9302, 0.9151.​

 

[SOLIDECN]

NZDUSD, the instrument retreats from local highs

The New Zealand dollar shows the development of downward corrective trend in tandem with the US currency during the Asian session, again testing the level of 0.695 for a breakdown. The NZDUSD pair has been retreating from its local highs since November 2021 without testing the strong resistance at 0.7 for a breakout.

The development of the "bearish" dynamics on the instrument is supported by technical factors, while the position of the US currency on the market changes slightly and remains quite strong against the backdrop of worsening economic prospects as the conflict over Ukraine, where Russian troops continue to conduct a special military operation, develops. Western countries are increasing sanctions pressure on the Russian economy, despite the noticeable back-effect of restrictions. The most important issue at the moment remains a potential embargo on Russian energy imports, which is likely to provoke a sharp complication of the situation in the European energy sector and lead to even greater inflationary pressures.

The positions of the New Zealand dollar are quite strong against the backdrop of trends in commodity areas. At the same time, analysts are paying attention to new outbreaks of coronavirus in New Zealand. Over the past day, more than 18K new cases of infection were detected in the country. Despite the pandemic, New Zealand's GDP returned to growth in the last quarter of 2021, but the increase was only 3.0%, falling short of economists' expectations of growth of 3.2%.

Resistance levels: 0.7, 0.704, 0.71, 0.715.
Support levels: 0.6924, 0.69, 0.6866, 0.684.​

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[SOLIDECN]

Silver, the price is consolidating near 25

Silver prices show a moderate decline during the Asian session, correcting after a fairly strong increase the day before on the back of lower yields and risk aversion in financial markets. However, the USD Index is rising for the second day in a row, renewing an intraday high around 98.800, adding 0.14%. XAG/USD is again testing 25 for a breakdown; however, there are not so many drivers for the development of the "bearish" trend.

The "hawkish" rhetoric of the US Federal Reserve had only a brief downward effect on safe-haven assets, after which the demand for silver, gold and a number of other trading instruments began to recover again. Traders are concerned about the uncertainty posed by the conflict in Eastern Europe ahead of US President Biden's meeting with his North Atlantic Treaty Organization (NATO) allies in Brussels. The special military operation carried out by Russian troops in Ukraine has been going on for a month already, while it is still premature to talk about the prospects for its completion. The peace talks, which continue to this day, have not led to any clear results due to the cardinal contradictions in the positions of the parties.

At the end of the week, investors expect an emergency EU summit to consider new sanctions against the Russian economy. The focus will be on the issue of a possible embargo on energy supplies from the Russian Federation to the EU countries. In addition, according to US Senator John Cornyn, he met with US Treasury Secretary Janet Yellen to discuss sanctions on Russian gold.

Resistance levels: 25.35, 25.58, 26, 26.27.
Support levels: 25, 24.67, 24.42, 24.​

 

[SOLIDECN]

Germany's energy sector faces new challenges

The key news for the market is the statement of the President of the Russian Federation Vladimir Putin, who instructed to convert all payments for natural gas supplies into rubles as soon as possible, and for the first time, the new technology will be tested in Europe. It will create some difficulties for buyers. According to German Economy Minister Robert Habeck, although the country considers such a decision to be a violation of contractual obligations, it is still impossible to refuse gas supplies from Russia. Later, the head of the Bundestag Committee on Economics and Energy, Klaus Ernst, noted that it is technically possible for Germany to pay for fuel in Russian rubles but this forces energy consumers to bypass their own sanctions restrictions, which is not entirely logical.

On the global chart, the price moves within the correction to the previous decline. Technical indicators keep a sell signal, which has almost been cancelled: indicator Alligator’s EMA fluctuations range narrowed almost completely, and the histogram of the AO oscillator reached the transition level.

Resistance levels: 14555, 15350.
Support levels: 14000, 12600.​

 

[SOLIDECN]

AUDUSD, Australian dollar renews highs since November 2021

The Australian dollar continues to develop a confident uptrend paired with the US currency during trading in Asia, preparing to end the week with a noticeable increase. AUDUSD is trading near 0.752 and is updating local highs of November 2021.

The instrument is supported at the end of the week by the growth of corrective sentiment in favor of risky assets. The euro and the pound are strengthening in parallel against the US dollar, the decline of which was facilitated by the publication of weak data on the dynamics of Durable Goods Orders in the US the day before. In February, the indicator fell sharply by 2.2% after rising 1.6% a month earlier. Analysts had expected negative dynamics, but they hoped for a decline only by 0.5%. Durable Goods Orders excluding Defense fell 0.3% in February after rising 1.3% in January.

Statistics from Australia, published yesterday, also turned out to be worse than market expectations. Commonwealth Bank Services PMI rose from 57.4 to 57.9 points in March, while market forecasts suggested a sharp increase in the indicator to 62.7 points. Commonwealth Bank Manufacturing PMI over the same period strengthened from 57 to 57.3 points, with forecasts for growth to 59 points.

Bollinger Bands on the daily chart show a steady increase. The price range expands, freeing a path to new record highs for the "bulls". MACD indicator is growing, while preserving a rather stable buy signal (located above the signal line). Stochastic, having reached its highs has been in the horizontal plane for a long time, indicating the risks of the Australian dollar being overbought in the ultra-short term.

Resistance levels: 0.755, 0.76, 0.765, 0.77.
Support levels: 0.75, 0.744, 0.7366, 0.73.​

 

[SOLIDECN]

FTSE 100, UK stock market is strengthening

The British stock market was supported by yesterday's macroeconomic statistics, according to which the composite index of business activity for March was 59.7 points, which exceeds the analysts' forecast of 58.7 points. The index of business activity in the UK services sector rose to 61.0 points from 60.5 points earlier.

In addition, it is worth noting the period of stabilization in the UK bond market, where 10-year treasury securities were fixed in the region of the highs of the year at the level of 1.638%. In turn, the yield on 20-year conservative bonds reached 1.894%, which is somewhat inferior to 1.957% at the beginning of the week.

The growth leaders in the index are Polymetal International Plc. (+20.73%), Fresnillo Plc. (+5.73%), M&G Plc. (+2.45%).

Among the leaders of the decline are Next Plc. (-3.26%), Ferguson Plc. (-3.25%), Schroders Plc. (-3.14%).

Index quotes continue to trade within the global Expanding Formation pattern. Technical indicators are in a stable buy signal state: the range of EMA fluctuations on the Alligator indicator expands in the direction of growth, and the histogram of the AO oscillator is forming new ascending bars in the purchase zone.

Support levels: 7384, 7020.
Resistance levels: 7520, 7800.​

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[SOLIDECN]

USDJPY, US dollar hits highs of the end of 2015​

The US dollar continues its strong growth in the USDJPY pair during Asian trading, renewing all-time highs since December 2015 and testing 123 for a breakout. The "bulls" are further supported by a wave of risk aversion that is boosting demand for safe-haven currencies, as well as strong US Treasury yields, which hit a new two-year high of 2.5%, up more than 1 percentage point since early December.

In addition, the exchange rate of the trading instrument is strengthening against the backdrop of the aggressive rhetoric of the US Fed, aimed at combating a record inflation for 40 years, which reached 7.9% in annual terms in February. The regulator launched a cycle of the interest rate hike this month, and in May it may decide to adjust it immediately by 50 or even 75 basis points. It is also expected that in the near future the Fed will begin to reduce its own balance sheet, which, according to the latest estimates, reaches 9 trillion dollars.

The yen gained momentum after the Bank of Japan announced its readiness to purchase an unlimited number of 10-year bonds at 0.25%. The regulator continues to go against the main trend in terms of tightening monetary policy. Due to low inflation, the country's financial authorities have kept the short-term interest rate on commercial bank deposits at -0.1% per annum, and the target yield on ten-year government bonds is near zero. Macroeconomic statistics released last Friday in Japan pointed to the acceleration of inflation in the Tokyo region in March from 1.0% to 1.3%, while the forecast was 1.5%. According to the Bank of Japan Governor Haruhiko Kuroda, the growth rate of consumer prices may reach 2% in April or later, but this will not be the basis for an immediate reaction from officials.

Resistance levels: 123.5, 124, 124.5, 125.
Support levels: 122.42, 122, 121.4, 120.5.

 

[SOLIDECN]

EURUSD, EU intends to reduce dependence on Russian gas​

The key event of the past week was the statement by Russian President Vladimir Putin that payment for natural gas supplies to "unfriendly" countries should now be made in rubles. The head of the European Commission, Ursula von der Leyen, noted that official Moscow's violation of contractual obligations is an attempt to circumvent Western economic sanctions imposed on the country after the start of a special military operation in Ukraine. EU High Representative for Foreign Affairs and Security Policy Josep Borrell stressed that European states would be able to refuse Russian gas supplies within two years since work has already begun to diversify sources and reduce dependence on energy raw materials from Russia. Also, at a press conference at the Doha Forum, the official noted that an agreement on a "nuclear deal" with Iran could be signed in the coming days. It will bring additional volumes of energy resources to the market. Meanwhile, German Chancellor Olaf Scholz said that Germany could stop importing coal and oil from Russia as early this year, noting that EU countries are still too dependent on imports. As for macroeconomic data, the business climate index in Germany continued to decline and dropped to 90.8 points in March from 98.5 points shown a month earlier. The index of business expectations corrected to 85.1 points from 98.4 points.

Against the backdrop of an impending new wave of crisis in the EU, the US dollar looks pretty stable, despite not very positive statistics. Thus, in February, the index of pending sales in the real estate market amounted to –4.1%, which was worse than the 1.0% growth predicted by analysts. The University of Michigan Consumer Sentiment Index stood at 59.4 in March, down from 62.8 in February.

The asset moves within a wide downward channel, declining towards the support line. Technical indicators hold a strong global sell signal: fast EMAs on the Alligator indicator are below the signal line, while the AO oscillator histogram remains deep in the sell zone.

Resistance levels: 1.1071, 1.1341.
Support levels: 1.0894, 1.0680.​

 

[SOLIDECN]

USDCAD, in anticipation of additional growth drivers​

The USDCAD pair tests the level of 1.2500 for a breakout, retreating from local lows of January 20, renewed last Friday, and waiting for additional growth drivers to appear.

The whole picture in the market changes slightly. Traders are still analyzing warning signs from Eastern Europe, trying to assess the prospects for global inflation and economic growth against a special military operation in Ukraine. Further escalation of the conflict significantly increases the demand for safe assets, but investors are increasingly giving their preference to the US currency, as the US Federal Reserve launched a cycle of raising interest rates. Also, as early as May, the rate growth rates may be increased, given the record inflation in the US and the relatively positive situation in the national labor market. The “bulls” are also supported by the escalation of tension between Russia and the West, the imposition of mirror economic sanctions by the states, and the lack of progress in ceasefire negotiations between representatives of the Russian and Ukrainian delegations. The next face-to-face round is scheduled for March 28–30. It will be held in Turkey.

The US macroeconomic statistics released on Friday were negative. Thus, the index of consumer confidence from the University of Michigan in March decreased from 59.7 to 59.4 points, while analysts did not expect changes. The pending home sales fell by 4.1% in February after falling by 5.8% in January. Analysts had expected positive dynamics at 1.0%. Meanwhile, the 10-year US Treasury yield rose by 5.4 basis points to its highest level since May 2019, around 2.54%, which pushed the US dollar index to a two-week high.

Resistance levels: 1.2558, 1.2600, 1.2650, 1.2700.
Support levels: 1.2450, 1.2400, 1.2335, 1.2300.​

 

[SOLIDECN]

NZDUSD, upward momentum begins to weaken​

The New Zealand dollar shows mixed trading dynamics against the US currency in the Asian session, consolidating near the support at around 0.69.

Yesterday the instrument fell sharply, but this was due only to technical factors, as well as market hopes that the US Federal Reserve will accelerate the tightening of monetary policy in the near future. In particular, it is assumed that the regulator will raise the interest rate in May by 50 basis points at once, and will also launch quantitative tightening mechanisms. In addition, the benchmark 10-year US Treasury yield hit a multi-year high of 2.557% the day before, making the US currency even more attractive to invest in.

The demand for the US dollar is also supported by the development of the military conflict in Ukraine. Traders are frustrated with the negotiation process, which has not led to any results so far. In turn, the sanctions pressure is only increasing, and Russia is already preparing to take retaliatory measures. In particular, Russian President Vladimir Putin ordered all payments for gas to be converted into rubles, which many European countries considered a violation of existing contracts. In addition, the authorities of Shanghai, home to about 25 million people, have introduced a record in two years lockdown due to the outbreak of the coronavirus. For the duration of the restrictions, transport communication will be stopped, most enterprises will switch to a remote mode of operation. Experts believe that a prolonged lockdown could affect demand for commodities such as crude oil, as well as threaten to collapse the global economy.

Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is going down preserving a stable sell signal. Stochastic is showing similar dynamics; however, the indicator line is rapidly approaching its lows, indicating the risks of NZD being oversold in the ultra-short term.

Resistance levels: 0.6924, 0.696, 0.7, 0.705.
Support levels: 0.6866, 0.684, 0.6795, 0.6766.​