Daily market analysis

March 3, 2022

Equities rebounded sharply on Wednesday despite of the intensifying conflict between Russia and Ukraine and a surge in crude oil price. At the same time, US equities moved higher after the testification of the Fed Chair Jerome Powell, implying that the policy rate is likely to hike in March regardless of the war in Ukraine. The Dow Jones Industrial Averages climbed 1.79% while the Nasdaq Composite gains 1.62%; meanwhile, the S&P 500 added 1.86% at the end of the day on Wednesday.

Following the major economic sanctions toward Russia, rumors said that major currencies might be next, including Bitcoin and Ethereum. According to the statistics from currency provider Kaiko, it showed that transactions on centralized exchanges in Ruble has surged to the highest levels in months; this might be the move that Russians are using currencies to hedge their risks, resulted from sanctions. With all of that, the US is reportedly trying out a new way to dial up the pressure on Russia and Putin, sanctioning currencies like Bitcoin and Ethereum.

As Russia’s turmoil lifts oil price, OPEC+ eventually ratifies modest supply hike. The OPEC+ and its allies have agreed to increase 400,000 barrels a day, continuing the gradual restoration of output since the pandemic. However, oil price continues to surge above $110 a barrel on Wednesday.

Main Pairs Movement:

EURUSD falls to slightly below 1.1057, the lowest level in nearly two years. The euro dollar weakens as fears dominated financial markets; the war between Russia and Ukraine is going to have a negative impact on the economic growth, particularly in Eurozone besides in Russia and Ukraine themselves. On the other hand, the US ADP employment report adds 475K new jobs, better than expected; that being said, the US Fed is more likely to go ahead dealing with the policy rates, thus the US dollar gets boosted.

Gold declines from near- a 13 month high as risk sentiment is buoyed by the US Fed indicating the commitment to fighting inflation with interest rate hikes. Despite of the intensification of the war between Russia and Ukraine, gold dropped more than $17 per ounce in a minute after the speech from Jerome Powell.

WTI rallies for the third consecutive day, targeting a new high of $112.20 since 2017. The market sentiment is upbeat as the market continues to react and digest the impact of sanctions on Russia. Further price action of oil eye on the next step of OPEC+.

Technical Analysis:

GBPUSD (4-Hour Chart)

Cable traded sideways against the  Dollar over the course of yesterday’s trading. The U.S. ADP nonfarm employment change came in better than expected, thus buoying the Dollar. In his statement, Fed Chairman Jerome Powell stated his support for a 25 basis point interest rate increase in March; however, Chairman Powell reiterated the uncertainty that the crisis in Ukraine and Russia has brought to financial markets. On the economic docket, the U.K. is due to release its February PMI data and the U.S., its initial jobless claims figures for the previous month.

On the technical side, Cable successfully defended the support level at 1.3311. The key resistance level at 1.3435 still stands unchallenged. RSI for the pair has resumed to normal levels at 39.64. At the time of writing, Cable is trading below its 50, 100, and 200 day SMA.

Resistance:  1.3435, 1.35212

Support: 1.331

EURUSD (4-Hour Chart)

The Euro continued to trade lower against the Dollar for the second straight day. As of writing, the shared currency has fell 0.25% against the greenback. Worse than expected inflation data from the EU has sent the shared currency further down. With the U.S. Fed Reserve set on a tightening monetary policy, the Euro will continue to be disfavored compared to the Dollar.

On the technical side, the support level at 1.1087 still holds but this support level is relatively weak as the pair has dipped below multiple times. RSI for the pair sits at 38.17, 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 lower over the course of yesterday’s trading as global market participants reassessed the Ukraine – Russia crisis. The Dollar soared with the help of strong U.S. economic data and a strong rebound by U.S. equities. In his State of the Union speech, U.S. president Joe Biden reaffirmed the American public that President Putin’s aggression will not go without punished. Fed Chairman Jerome Powell’s support for a 25 basis point rate hike by March has also provided momentum for the greenback.

On the technical side, XAUUSD continues to be capped at 1950 for the past 2 days. Support level for gold at 1920 seems to have formed and the support level at 1900 still stands unchallenged. RSI for the pair has resumed to normal levels at 51.4, as of writing. Currently, XAUUSD is trading above its 50, 100, and 200 day SMA.

Resistance: 1909.16, 1953.407

Support: 1920, 1900

Economic Data:

CurrencyDataTime (GMT + 8)Forecast
GBPComposite PMI (Feb)17:3060.2
GBPServices PMI (Feb)17:3060.8
EURECB Account of Monetary Policy Meeting20:30
USDInitial Jobless Claims21:30226K
USDFed Chair Powell Testifies23:00
USDISM Non-Manufacturing PMI (Feb)23:0061