Daily market analysis

March 4, 2022

US equities churned lower on Thursday, led by the tech sector as markets continued to monitor the war and negotiation in Ukraine. In the meantime, the Fed Chair Jerome Powell mentioned rates are headed higher despite of the uncertainty in Ukraine. The Dow Jones Industrial Average closed with 0.29% lower, and the S&P 500 declined 0.53% on Thursday. The Nasdaq 100 dropped 1.56% at the end of the day.

Western countries continues to impose more sanctions against Russia along with widespread measures against its president and officials. With all of the current sanctions, the Wall Street expects Russia’s GDP is going to contract by 35% in the second quarter of 2022, which is a drastic slowdown comparable to the financial crisis back in 1998.

Russia’s Ukraine invasion could potentially have set in motion an energy market disruption since the major oil crisis in the 1970s. The disruption is approaching as the energy market in already tightly supplied; sanctions by the US and its allies on Russia’s financial system virtually disrupt sales of crude oil. With those, oil price might heads toward another peaks.

Main Pairs Movement:

EURUSD rebounded a bit, but still hitting fresh 22- month lows on Thursday, closing with 1.10659. The euro dollar remained pressured against the US dollar after the release of NFP report. US dollar continued embracing buyers with all the expectations that the Fed’s interest rate hikes. At the same time, as the war in Ukraine continues, markets tend to favor the traditional safe- heaven currency, the US dollar.

AUDUSD witnessed a rally in the first week of March, extending its gain to 0.73336 amid a strong performance by its trade balance.

USDJPY did not change much amid the slightly dovish stance by Jerome Powell’s second speech. USDJPY traded at 115.453 at the end of the day on Thursday. Further price action eye on Friday’s US economic data.

Gold surged  to $1941.29 per ounce in the late US trading session as the second round of the negotiation between Russia and Ukraine has not came up with a result yet.

Technical Analysis:

GBPUSD (4-Hour Chart)

The British Pound sank again against the Dollar as Fed Chairman Jerome Powell reassures the hawkish stance of the Fed. In his testament, Chairman Powell reassured senators that the Fed will reduce its balance sheet and commit to interest rate hikes in order rein in inflation. The second round of peace talks between Russia and Ukraine failed to stop Russia’s advance onto Ukraine’s soil. As of writing, Russian troops have entered Kherson, one of Ukraine’s key strategic port.

On the technical side, Cable is still trading above our projected support level at 1.3311 and the pair is expected to stay above this key support level. RSI for the pair sits at 42.82. Currently GBPUSD is trading below its 50, 100, and 200 day SMA.

Resistance:  1.3435, 1.35212

Support: 1.331

EURUSD (4-Hour Chart)

The Euro continues to sell off and has dropped to a new multi-month low. The conflict in eastern Europe continues to weigh on the shared currency. Nord Stream 2, a key project that would bring energy costs lower, announced bankruptcy amid global economic sanctions on Russia. The ECB released its latest meeting, which stated a scaling back of accommodative monetary policy; furthermore, the PEPP is projected to end by March. Despite ECB’s expressed interest in scaling back accommodative monetary policies, the shared currency will continue to be unattractive as global central banks engage in direct interest rate adjustments.

On the technical side, EURUSD has, as projected, broken through our estimated support level at 1.11629. Further down support for the pair can be found at 1.1007. RSI for the pair has dripped to 32.2354, as of writing. EURUSD is currently trading below its 50, 100, and 200 day SMA.

Resistance: 1.1224, 1.12793

Support: 1.11629

XAUUSD (4-Hour Chart)

Gold traded sideways as no resolute came out of the second round of peace talks between Russia and Ukraine. The safe haven asset remains highly in demand as situations are still extremely fluid. As of writing, Russia troops have taken over a key strategic port of Ukraine. The recent volatility of gold seems to have waned, despite escalating tensions between Russia and Ukraine.

On the technical side, a new support level has formed around 1918 for XAUUSD; on the other hand, a new resistance level at 1946 seems to have formed as well. As of writing, RSI for the precious metal sits at a neutral 54.81. XAUUSD is currently trading above its 50, 100, and 200 days SMA.

Resistance: 1909.16, 1953.407

Support: 1920, 1900

Economic Data: