Japan’s Prime Minister (PM) Fumio Kishida crossed wires, via Reuters, during early Friday morning in Asia while saying that they will strengthen sanctions against Russia.

Additional quotes

Read: USD/JPY rallies to mid-115.00s despite drop in US yields, bulls eye 116.30 resistance

• The NZD dollar vs. the JPY is set to end tie week with gains, so far up 0.40%.
• Thursday’s North American session ended in the green, depicting a risk-on market mood.
• NZD/JPY Technical Outlook: Neutral-upward biased, confirmed by a bullish RSI.

On Thursday, the New Zealand dollar felt the weight of being a risk-sensitive currency greatly influenced by market sentiment guided by headlines of the Russian invasion of Ukraine, which kept investors on their toes, triggering a risk-off mood. However, once US President Biden enforced a new tranche of rigid sanctions on Russia, the market mood improved, and the pair recovered half of its earlier losses. So far, the NZD/JPY is trading at 77.30.

Thursday’s overnight session for North American traders portrayed a risk-off market mood as Russia’s commenced the invasion of Ukraine, announced by Russian President Vladimir Putin. The NZD/JPY pair dropped 130-pips sharply, from 77.88 to February’s 24 daily low at 76.63. Nonetheless, late in the North American session, US President Joe Biden announced new sanctions on Russia, which improved market sentiment through the end of Wall Street.

NZD/JPY Price Forecast: Technical outlook

The NZD/JPY ended the North American session, confined between the 50 and the 200-day moving (DMA), lying at 77.26 and 77.89, respectively. Furthermore, the Relative Strength Index (RSI) at 53.37 above the 50-midline and aiming higher signals the NZD/JPY as bullish biased with enough room before reaching overbought levels. That said, the NZD/JPY is neutral-upward bias.

Upwards, the NZDY/JPY first resistance would be the 200-DMA at 77.89. Breach of the latter would pave the way towards the 100-DMA at 78.34, but firstly, the NZD/JPY pair would need to clear 78.00.

On the flip side, the NZD/JPY first support would be the 50-DMA at 77.26. Once cleared, the next support would be 77.00, followed by February 24 daily low at 76.63.

Early Friday morning in Asia, Reuters conveyed the White House statements.

The news initially said that US President Joe Biden has been working with speech writers, policy team to finalize the State Of The Union (SOTU) address.

“China ties with Russia too limited to compensate for sanctions,” adds the White House (WH) afterward.

The WH also said, “(WH) Believes Putin has grander ambitions than Ukraine.”

FX implications

The news joins the slew of geopolitical updates suggesting further noise on the geopolitical front, which in turn can weigh on the risk barometer pairs like AUD/USD.

Read: AUD/USD fades corrective pullback below 0.7200 on Russia-Ukraine crisis

• AUD/USD struggles to keep the bounce off two-week low, dropped the most in a month on heavy risk-aversion.
• Russia’s invasion of Ukraine triggered market’s rush to risk-safety, Gold, USD benefited from sour sentiment.
• Chatters over large bombardment on Kyiv recently weigh on market’s mood.
• US Core PCE Inflation, Durable Goods Orders will add burden to watcher’s list.

AUD/USD seesaws around 0.7170 during the early hours of the Asian trading session on Friday, after posting the heaviest daily fall in a month.

Russia’s military attack on Ukraine triggered the flight to safety, which in turn drowned the Aussie pair the previous day, before activating a corrective pullback from a fortnight low on mixed chatters.

Russia finally invaded Ukraine from land, sea and air, without caring for international sanctions. The war conditions propelled the rush to traditional safe-havens like the US dollar and gold, which in turn weighed on the AUD/USD prices. However, the latest updates concerning US sanctions and terms of talks between Russia and Ukraine seemed to have stopped the south-run amid a generally quiet early Asian session.

As per the latest updates, Moscow’s military acquired Chernobyl and Ukraine President Zelenskyy signed a decree for general mobilization. Further, the Western leaders have announced more sanctions for Russia and showed readiness to support Kyiv with military power if conditions worsen.

On the contrary are the comments from Russia, like “Moscow is willing to negotiate the terms of Ukraine's surrender.” Additionally favoring the corrective bounce are the chatters that Ukraine President Zelenskyy said they need to discuss ceasefire with Russia.

It should be noted that the second reading of the US Q4 GDP matched 7.0% annualized forecasts but firmer figures of Personal Consumption Expenditure, Chicago Fed National Activity Index and Jobless Claims seemed to have added to the US dollar’s strength. Also favoring the greenback to stay firmer at the fresh 2022 high are the comments from Atlanta Fed President and FOMC member Raphael Bostic who favored three rate hikes this year. On the same line was Richmond Fed President and FOMC member Thomas Barkin said on Thursday that he hopes the Fed can restore interest rates back to pre-pandemic levels fairly quickly, reported Reuters. However, Cleveland Fed President Loretta Mester said on Thursday that she doesn't think raising interest rates by 50 bps in March is compelling, according to Reuters. 

Amid these plays, Wall Street closed with mild gains after the initial plunge whereas the US 10-year Treasury yields closed more or less at the same level the previous day, after marking a volatile day.

Moving on, CNN’s news that Russia is up for bombardment on Kyiv can exert fresh downside pressure on the AUD/USD prices.

On the data side, US Core PCE Inflation data and Durable Goods Orders may join Fedspeak to offer extra directives to the AUD/USD prices.

Technical analysis

Despite bouncing off a two-week low, AUD/USD prices keep the downside break of a monthly support line, now resistance around 0.7180. As a result, the quote is likely to decline further towards the 0.7100 threshold. It’s worth noting that the 100-DMA level of 0.7238 acts as an extra filter to the north.

• USD/CHF has slipped below 0.9250 as investors turn cautiously optimistic post-US sanctions on Moscow.
• The undertone of the market is still negative and investors might stick to the risk-aversion theme.
• The DXY is waiting for fresh impetus from the Russia-Ukraine war for further direction.

The USD/CHF pair has retreated from Thursday’s high at 0.9288, trading back and forth in a radius of 0.9243-0.9264, and is expected to skid further as the undertone of the market turns cautiously optimistic. It seems that investors have started digesting the maximum worse, which can happen to the world economy through the Russia-Ukraine war.

On Thursday, USD/CHF has witnessed a juggernaut rally after Moscow operated a full-scale military action on Ukraine despite the fear of sanctions and warnings from the Western leaders. The major gained around 0.7% against Wednesday’s closing price. Amid the geopolitical crisis, the risk-off impulse remained active and investors chose the greenback over the Swiss franc.

The situation of Ukraine has worsened after the attacks from the Kremlin. As per the United Nations (UN) refugee agency, “An estimated 100,000 Ukrainians had fled their homes. Thousands were crossing into neighboring countries, including Romania, Moldova, Poland, and Hungary.”

Meanwhile, the US dollar index (DXY) is awaiting fresh impetus for further guidance after refreshing 2022 peak. On Thursday, the GDP numbers (annualized) from the US Bureau of Economic Analysis remained in line with the estimates of 7% but improved from the previous print of 6.9%. While the weekly Initial Jobless Claims by the Department of Labor slipped to 232k from the previous print of 249k.

However, Thursday’s Employment Level released by the Swiss Statistics improved to 5.239M above than the market estimates and previous print of 5.179M and 5.213M respectively.

Russian military forces are expected to begin a large-scale bombardment of the Ukrainian capital city of Kyiv from around 0300am local time (0100GMT), reported a CNN correspondent citing an intelligence report. 

Market Reaction

There hasn't been any market reaction to these headlines yet but it certainly won't be a positive for global risk appetite if Russia does launch a second major assault on Ukraine. With the US and EU for now avoiding the most economically problematic sanctions on Russia, any risk-off reaction associated with further fighting probably wont be as severe. 

• USD/JPY moved higher to near 115.50 on Thursday despite a drop in US yields, with bulls eyeing resistance around 116.30.
• Extreme volatility in global energy markets could have dampened the relative appeal of the energy import-dependent yen versus the buck.
• Fed members endorsing policy tightening despite geopolitical risks may also have helped the buck versus its safe-haven peer.

A sharp drop in US yields on Thursday as investors flocked to the safety of government bond markets and pared-back modestly on medium-term Fed tightening in wake of Russia’s invasion of Ukraine failed to dampen the dollar versus JPY. Both currencies performer well compared to the rest of their G10 counterparts given their safe-haven status, but a spike in erratic trade and a spike in global energy prices eventually saw the buck favoured. The pair closed Thursday trade in the 115.50 area, after rallying about 0.4% on the day and continues to trade subdued in this region as Asia pacific trade gets underway.

Risks to global energy prices are still very much tilted to the upside amid expectations for an intensification of the Russia/Ukraine war in the coming days, despite the US and EU for now avoiding sanctions on Russian energy exports. That suggests the yen (Japan a big net energy importer) may continue to underperform the US dollar (the US a net energy exporter) in the near future, regardless of what happens to yields and Fed tightening expectations.

Fed members were out in force on Thursday and the general consensus seemed to be that while war in Europe was a key risk to the outlook to monitor, it remains appropriate to press ahead with rate hikes next month. That has kept Fed tightening expectations for 2022 largely intact, even if calls for a 50bps hike in March have receded in recent days. The fact that holders of USD can bank on rising interest rates in the coming months is another reason to favour the buck over the yen in turbulent, risk-off market conditions.

If the recent surge in commodities keeps upwards pressure on yields, then it seems likely that USD/JPY might follow in the footsteps of the broader Dollar Index, which hit its highest since early 2020 in the mid-97.00s on Thursday. Bulls will be eyeing a test of the 2022 double top in the 116.30s. A break above could open the door to further progression towards late 2016/early 2017 highs above 118.00.

• The British pound drops 1.12% in the week vs. the yen, blamed on Russia’s invasion.
• On Thursday, the Average Daily Range (ADR) of the GBP/JPY was 250 pips.
• GBP/JPY Technical Outlook: Persist upward-biased post reclaiming the 100-DMA.

The British pound is set to end the day in the red as the North American session winds down, following a busy session in the financial markets, driven by headlines of the Russian invasion of Ukraine, which has taken a toll on risk market mood. However, following US President Biden’s new tranche of sanctions imposed on Russia and people linked to Vladimir Putin’s regime, witnessed a U-turn on US stocks, spurred by a risk-on mood. That said, the GBP/JPY is trading at 154,47.

On Thursday, during the Asian Pac session, the GBP/JPY was subdued in the 155.43-88 area. But as soon as the headlines of Russian President Putin said that a special military operation was underway in Ukraine, the risk-sensitive GBP plummeted, reaching a daily low at 153.36, a 250-ípip move.

GBP/JPY Price Forecast: Technical outlook

In Wednesday’s article, I mentioned that the “GBP/JPY daily chart depicts a double-top, following the rally from January 24 low at 152.90, to February 10 high at 158.06.” Additionally noted that the double-top target was 153.80. All in all, the GBP/JPY double-top target was achieved, probably helped by anxiety and panic in the financial markets, which boosted appetite for safe-haven peers.

Wednesday article here: GBP/JPY Price Analysis: Double top in the making, targets 153.80

So far, as the Asian Pac session begins, the GBP/JPY licks its wounds and prepares for the last trading day of the week. The GBP/JPY finalized the North American session above the 100-day moving average (DMA) at 154.38 after piercing the 200-DMA at 153.38.

That said, the cross-currency pair remains upward biased, though it would depend on risk appetite. The GBP/JPY first resistance level would be February 3 daily low at 155.04. A decisive break would expose the 50-DMA at 155.32, followed by the 156.00 figure.

• NZD/USD fails to pare the biggest daily loss in five months, fades bounce off one-week low.
• NZ Retail Sales rallied in Q4 but trade deficit widened, RBNZ’s Orr showed concerns over inflation.
• Markets panicked as Russia invaded Ukraine from all three sides, international sanctions escalate.
• Geopolitical updates are the key catalyst to watch, US data, Fedspeak may offer additional directions.

NZD/USD drops back below 0.6700, around 0.6690 by the press time, as mixed data from New Zealand (NZ) joins the broad risk-aversion due to the Russian invasion of Ukraine. In doing so, the kiwi pair reverses the corrective pullback from weekly low during the early hours of Friday’s Asian session.

New Zealand Q4 Retail Sales reversed the previous contraction of 8.1% with 8.6% of growth, versus -2.2% expected figures. Further, the Trade Balance dropped to $-1082M and $-7.71B MoM and YoY respectively, way below the $-477M and $-6.78B monthly and yearly figures in that order.

Although mixed NZ data could be spotted as the latest burden on the NZD/USD prices, the market’s risk-off mood was the major blow to the Kiwi pair. The quote flashed the biggest daily loss in five months on Thursday as Russia finally invaded Ukraine from land, sea and air, without caring for international sanctions.

Apart from the data, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr recently crossed wires saying, “We’re particularly concerned about inflation expectations,” considering conditions in Ukraine. The policymaker also said, “Keep the possibility of moving rates quicker if necessary.”

As per the latest updates, Moscow’s military acquired Chernobyl and Ukraine President Zelenskyy signed a decree for general mobilization. Further, the Western leaders have announced more sanctions for Russia and showed readiness to support Kyiv with military power if conditions worsen. However, comments from Russia, like “Moscow is willing to negotiate the terms of Ukraine's surrender,” seemed to have triggered the latest bounce.

That said, Wall Street closed with mild gains after the initial plunge whereas the US 10-year Treasury yields closed more or less at the same level the previous day, after marking a volatile day.

It should be noted that the second reading of the US Q4 GDP matched 7.0% annualized forecasts but firmer figures of Personal Consumption Expenditure, Chicago Fed National Activity Index and Jobless Claims seemed to have added to the US dollar’s strength. Also favoring the greenback to stay firmer at the fresh 2022 high are the comments from Atlanta Fed President and FOMC member Raphael Bostic who favored three rate hikes this year. On the same line was Richmond Fed President and FOMC member Thomas Barkin said on Thursday that he hopes the Fed can restore interest rates back to pre-pandemic levels fairly quickly, reported Reuters. However, Cleveland Fed President Loretta Mester said on Thursday that she doesn't think raising interest rates by 50 bps in March is compelling, according to Reuters. 

Moving on, geopolitical catalysts are the key for markets while US Core PCE Inflation data and Durable Goods Orders may join Fedspeak to offer extra directives.

Technical analysis

Despite posting the first daily closing below 50-DMA since Monday, NZD/USD refrained to break a one-month-old rising trend line, at 0.6650 by the press time, on a closing basis. The same favor the odds of a corrective pullback towards regaining above the stated DMA level, near 0.6730 at the latest.

• GBP/USD is oscillating in a range of 1.3376-1.3403 amid fewer headlines on geopolitical issues.
• US President Joe Biden imposes sanctions on Russia that will cut its technology imports.
• The DXY looks to rebound after skidding near 96.91 amid profit booking.

The GBP/USD pair has rebounded from the lows of 1.3273 and is oscillating in a narrow range of 1.3376-1.3403 as investors are waiting for fresh headlines from the Russia-Ukraine tussle. The cable has been hammered by the market participants on Thursday after a full-scale invasion by Russia. US President Joe Biden holds Russia seldom responsible for the death and destruction in Ukraine after an active Russian military activity in the Donbas region in eastern Ukraine.

The expectations of an imminent war turned real on Thursday after the Kremlin unleashed the most destructive war since 1945. The headlines of military troops, explosions, and gunfire amid the Russian attack on Ukraine kept the investors on their toes. A risk-off impulse heightened and investors started pouring their funds into safe-haven assets.

Meanwhile, US President has imposed more sanctions on Russia that may put deeper cuts on their technology imports. As per the new sanctions Sberbank and four other major Russian financial institutions — VTB Bank, Novikombank, Otkritie, and Sovcombank will be blocked.

US President Joe Biden said in a statement that "As we squeezed Russian’s access to finances and technology for strategic sectors of its economy, it can degrade its industrial capacity for years to come,"  "We estimate that the sanctions will cut off more than half of Russia's high tech imports, which will limit their ability to continue to modernize their military," as per Reuters.

The US dollar index (DXY) looks to rebound after the profit-booking that has sent the DXY lower towards 96.91 in the late American session, which has brought some bids in the pound.

Apart from the Russia-Ukraine war headlines, investors will also focus on GfK Group Consumer Confidence, which will be reported by Britain’s Growth from Knowledge on Friday.

• A recovery in sentiment after the US’s soft sanction response to Russia’s Ukraine invasion helped AUD/JPY recover from intra-day lows.
• The pair is back to trading in the 82.80 area, more than 1.0% up from earlier lows near 82.00.
• Given tensions remain high and markets on edge, the 83.00 area may continue to be viewed as a near-term ceiling.

As sentiment in US equity markets recovered in the aftermath of US President Joe Biden’s announcement of fresh sanctions against Russia for its invasion of Ukraine, AUD/JPY received significant tailwinds. Though the pair has failed to get back above the 83.00 level, at current levels in the 82.80s, it still trades about 1.0% higher versus earlier intra-day lows in near 82.00. That still leaves it down about 0.4% down on the session, but nonetheless marks an impressive intra-day recovery.

Risk appetite took a turn for the better following Biden’s Russia sanction announcements as the US President confirmed that Russia’s energy sector would not be targeted given European dependence on Russian energy imports. Some have pointed out that ahead of the November 2022 mid-term elections, the Biden administration has a strong aversion to anything that might pump global energy-driven inflationary pressures even further.

The soft sanctions helped ease demand for safe-havens such as the yen and helped spur inflows into more risk-sensitive currencies such as the Aussie, facilitating AUD/JPY’s intra-day rebound. But the war in Ukraine is set to intensify in the coming days with Russia still a long way from achieving its goals (which the US thinks entails the “decapitation” of the Ukrainian government).

The US and EU have said that everything is still on the table regarding Russia sanctions. If things start to get really gnarly in Ukraine, public pressure on the US and EU to “do more” to deter Russian aggression could grow. In other words, Russian energy exports remain in the firing line and Russia may yet see itself kicked off of SWIFT. For this reason, the chances for risk appetite to stage a more lasting rebound remains slim and rallies towards 83.00 in AUD/JPY may continue to be viewed as good sell opportunities.

• WTI fell back to near $93.00 having spiked as high as $100 earlier in the session as Russia invaded Ukraine.
• US and EU sanctions have for now avoided the Russian energy sector, easing supply disruption concerns.
• President Biden also said the US would release oil from the SPR.

Oil markets saw the most intra-day volatility since in nearly three months on Thursday, with front-month WTI futures surging over $8.0 to above $100 for the first time since 2014, only to then drop all the way back to $93.00. The initial surge in crude oil prices was triggered as Russia launched a full-scale military assault on Ukraine during Thursday’s Asia Pacific session on fears that subsequent economic sanctions from the West would lead to global oil supply disruptions.

Analysts at UBS noted that Russia is the world’s third-largest producer and second-largest exporter of crude oil. “Given low inventories and dwindling spare capacity, the oil market cannot afford large supply disruptions” they said. But concerns about global supply disruption eased later in the session as it become clear that US and EU sanctions on Russia would not target its energy sector, resulting in the sharp pullback.

US President Joe Biden also said that the US would release oil from its Strategic Petroleum Reserves to ease supply shortage concerns, news which when combined with a larger than expected build in weekly US oil inventories, weighed on prices. Despite Thursday’s more than $9.0 intra-day swing, analysts largerly remained of the conviction that oil prices would remain well supported moving forward.

The Russia/Ukraine conflict will likely intensify in the coming days and tensions between Russia and NATO are set to remain at multi-decade highs, suggesting that the significant geopolitical risk premia that remain priced into crude oil likely isn't going anywhere anytime soon. One alternate theme for investors to watch is signs of further progress in nuclear negotiations between the US and Iran.

Iran’s top security official on Thursday was upbeat on the prospects of finding a good deal with Western powers following recent progress. A deal could see the US lift sanctions on Iranian exports that analysts have said could free up 1.3M barrels in supply to global markets.

• The EUR/USD losses in the day some 0.81%, amid Russia’s offensive on Ukraine.
• Conflict woes between Ukraine and Russia dampened market players’ mood.
• EUR/USD Technical Outlook: Neutral-downward biased, though a daily close below 1.1200, could exacerbate a move towards 1.1100.

The shared currency is dropping during the North American session, though it rebounds off daily lows at 1.1106, and is recovering slightly as the session progresses, amid a renewed upbeat market mood, portrayed by US equity indices with gains. At the time of writing, the EUR/USD is trading at 1.1207.

In the meantime, the US Treasury yields pare earlier losses, with the US 10-year T-note yield flat, sitting at 1.970%, while the greenback remains bid, with the US Dollar Index up 0.96%, currently at 97.12, retreating from the 97.73 level, last seen in July 2021.

At the moment, the market sentiment improved. However, woes in the Ukraine – Russia conflict remain. In the Asian session, Russian President Vladimir Puttin announced that a special military operation in Ukraine was underway. Russia’s operation deployed bombers loaded with weapons, special forces and launched missiles to Ukrainian command centers.

Western and NATO countries condemned the attack from Russia to Ukraine and will impose another tranche of sanctions, more decisive and harmful than the previous ones. Some of the sanctions that wi imposed are: freezing assets in the EU and blocking Russian banks to EU financial markets, while UK’s prime minister is pushing for Russia’s ejection of the SWIFT payment system.

Regarding macroeconomic data, the EU economic docket featured ECB speakers. ECB’s Stoumaras mentioned that the APP would remain until the end of 2022, while Holzman commented that the Ukraine conflict would delay the end of QE. Regarding inflation, ECB Schnabel said that it is higher than expected and broadening but emphasized it would tame under 2% in the year.

Across the pond, US Initial Jobless Claims for the week ending on February 19 rose to 233K, lower than the 235K foreseen, while PCE Prices for the Q4 rose to 6.3% q/q, lower than the 6.4% estimations.

Therefore, the EUR/USD pair would still be subject to market sentiment. If tensions dwindle, it could be probable that the EUR/USD could print another leg-up towards the 1.1300 area. In comparison, further escalation would witness another attempt at the 1.1100 level.

EUR/USD Price Forecast: Technical outlook

The EUR/USD is downward biased as depicted by the daily moving averages (DMAs) above the exchange rate. Nevertheless, the sudden jump on the pair, attributed to ECB’s hawkish tone perceived on its February monetary policy, spurred a rally to 1.1400. From a technical perspective, the EUR/USD is neutral-downwards.

On the downside, the EUR/USD first support would be 1.1200. Breach of the latter would expose last year’s November 24 daily low at 1.1186, followed by February 24 daily low at 1.1106.

Spot gold changed course after hitting a multi-month high of $1,974.40 a troy ounce and plummeted to $1,877.96, now bouncing modestly from the latter. The bright metal began shedding ground heading into the US opening, accelerating its slide afterwards. A recovery in Wall Street put the final nail on gold's coffin and pushed it below the 1,900 level. Stocks cheered comments from US President Joe Biden, who announced several aggressive international sanctions on Russian people and institutions. 

Gold trades near a fresh weekly low and the near term picture hints at another leg south, mainly on a break below the aforementioned daily low.

What you need to take care of on Friday, February 25:

 Panic took over financial markets as Russia launched a military attack on Ukraine. Moscow attacked not only the Donbass region but got near Kyiv during US trading hours. Russia ignores global sanctions and seems determined to take full control of Ukraine.

A nuclear waste storage facility in Chernobyl, Ukraine, was destroyed after Russian forces entered and fighting broke out, an advisor to the Ukrainian Interior Ministry told NBC. The advisor warned that radioactive dust could cover the territories of Ukraine, Belarus and the EU.

Russian President Vladimir Putin said that they had no other chance but to act differently, as all previous attempts to change the situation were fruitless. He added that Russia remains a part of the global economy and do not plan to damage the system they belong to.

However, the whole world condemned the situation and announced sanctions on Russia. The UK has been among the most aggressive, as UK Prime Minister Boris Johnson pushed for Russia to be ejected from SWIFT system. Earlier in the day, Johnson said that the UK would provide Ukraine defensive weaponry while doing everything to keep Britain safe. Additionally, he said that the kingdom  will agree  with allies “on a massive package of economic sanctions designed in time to hobble the Russian economy.”

NATO Secretary General Jens Stoltenberg said on Thursday that Russia is using force to try to rewrite history, as reported by Reuters. Among other things, he said that the organism will deploy  “capabilities and forces including NATO Response Force," adding that they would do whatever is necessary to shield the alliance from aggression.

French President Emmanuel Macron said that Russia’s deliberate choice to attack Ukraine violated UN rules, adding that France stands beside Ukraine and that the country will respond “without weakness” to this act of war. Finally, he noted that sanctions against Russia would factor in the energy sector.

US President Joe Biden announced a series of sanctions on Russian institutions and people, aimed to maximize the long-term impact on Russia and minimize the effect on the rest of the world. Finally, the European Council agreed on further restrictive measures that will impose “massive and severe consequences” on Russia for its actions.

Gold soared to $1.974.40 a troy ounce, its highest since September 2020. The metal pulled back ad plummeted to the current $1,880.00 price zone during US trading hours, where it currently stands, as market players unwind fear-related trades following US President Biden's statement.

Meanwhile, Federal Reserve Raphael Bostic noted that Fed policy is poised to return to a more normalized stance. Among other things, he added that he is “very open” to going for more than 3 rate hikes this year.  

EUR/USD recovered from a fresh 2022 low of 1.1105 to currently trade around 1.1200. The GBP/USD pair stands at around 1.3400, while commodity-linked currencies also shed part of their intraday gains

Crude oil prices also dipped into negative territory after reaching multi-year highs. WTI traded as high as $100.50 a barrel, now changing hands at around $92.20.

Wall Street trimmed most of its intraday losses, trading mixed ahead of the close. The Nasdaq Composite is the best performer, up over 200 points after shedding roughly 4% at the beginning of the day.

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Investors fleeing cryptocurrencies as residents flee Kyiv

• Gold printed a 14-month-old fresh high around $1,974 amid the Ukraine – Russia war escalation.
• US Treasury yields fell, though the US Dollar strengthened across the board.
• XAU/USD Price Forecast: If bulls hold above the $1916 mark, they could remain hopeful of reaching higher prices.

Gold (XAU/USD) climbs in the North American session, thought retreats from 14-months daily highs at $1,974.48, as the Ukraine – Russia conflict escalated, with Russia invading Ukraine, as a growing appetite for safe-haven assets increases, to the detriment of riskier assets. At press time, XAU/USD is trading at $1,919.50.

In the meantime, the US Treasury yields fall as the appetite for US Treasuries thrives. The US 10-year T-note yield dwindles six basis points sits at 1.918%, a headwind for the non-yielding metal. Contrarily, the greenback remains bid, moving in tandem with XAU/USD, with the US Dollar Index up 1.08%, currently at 97.23, retreating from the 97.73 level, last seen in July 2021.

How is Russian-Ukraine war impacting financial markets? Follow our live coverage updates

XAU/USD Price Forecast: Technical outlook

XAU/USD is upward biased, as depicted by the daily chart. Gold bull’s pushed the price towards a daily high at $1,974.78 and, on its way north, broke June 2021 highs at $1,916.60. If XAU bulls achieve a daily close above the latter, they could remain hopeful of keeping spot gold trading in the $1,916-$1,959 area.

The XAU/USD first resistance would be June 6 daily high at $1,959.06. Breach of the latter would expose February 24 daily high at $1,974.78, followed by a move towards $2,000.

US President Joe Biden was scathing in his criticism of Russia's attack on Ukraine on Thursday and announced that he would be authorising new sanctions on Russia, including on exports. Biden said that the sanctions are designed to maximise the long-term impact on Russia's economy but minimise the impact on Europe. We will prevent Russia from doing business in dollar, yen, pounds and euros, Biden continued, and we have sanctioned Russian banks holding more than $1T in assets. Biden bragged about recent weakness experienced by the Russian ruble, and in Russian credit default swaps, as indicative of the success of Western sanctions in their impact on the Russian economy. 

Biden said that while he would be sending US troops to fight in Ukraine, he will be authorising additional forces to go to Germany to reassure allies in Eastern Europe. There is no doubt that the US and NATO will meet their Article 5 commitment, Biden reiterated. If Russia attacks the US or West with cyberattacks, the US will respond, Biden said.  

Biden confirmed that the Russian energy sector would not be targeted by US sanctions and said that oil and gas companies should not exploit the crisis and hike prices. Biden reiterated that the US is working to secure global energy supplies and said that his administration would release additional oil from the SPR as needed. 

Russian government spokesperson Dmitry Peskov said on Thursday that Moscow is willing to negotiate the terms of Ukraine's surrender. Peskov said that Russian President Vladimir Putin is ready to talk with Ukrainian President Volodymyr Zelensky if Ukraine agrees to compromise on Russia regarding its "red lines". These include that Ukraine guarantees neutral status, as well as the removal of certain weapons from its territory. 

• NZD/USD has pulled back sharply from Wednesday’s post-RBNZ highs above 0.6800 to the 0.6660 area as Russia invades Ukraine.
• As the fighting continues and amid uncertainty regarding the NATO response, risks remain tilted to the downside.

Wednesday’s post-hawkish RBNZ optimism that helped lift NZD/USD briefly to the north of the 0.6800 level is now well in the rear-view mirror, with NZD/USD having now reversed more than 2.0% lower from its earlier weekly peaks. Though the move didn’t come as too much of a surprise to geopolitical strategists and news addicts, Russia’s decision to initiate an invasion against Ukraine on Thursday seemed to catch global FX markets off guard. FX investors have piled into safe-haven currencies like the US dollar at the expense of more risk-sensitive currencies like the New Zealand dollar.

At current levels in the 0.6660 area, NZD/USD trades about 1.6% lower on the day, the pair having seemingly found some short-term support at its 21-Day Moving Average at 0.6650. A more than 1.5% drop is a big one-day move for NZD/USD and, typically, would be followed by some consolidation/mean-reversion. But with the geopolitical situation regarding Russia’s ongoing assualt into Ukraine fluid, such a bet would be risky. Price action is likely to remain heavy and risks tilted to the downside for NZD/USD as the war continues and the world waits to see how the US/EU will respond.

• The EUR/GBP is 0.39% up in the week.
• A risk-off market mood caused a fluctuation In the pair, benefitting the low-yielder euro.
• EUR/GBP is neutral biased, even though the DMAs reside above the spot price.

On Thursday, The EUR/GBP climbs during the day, so far 0.12% amid Russia’s invasion of Ukraine, spurring a risk-off market mood. At the time of writing, the EUR/GBP is trading at 0.8355, after reaching a daily high, precisely at the 50-day moving average at 0.8378.

During the overnight session for North American traders, the EUR/GBP cross-currency broke below February 23 daily low at 0.8325, a signal of bearishness in the markets. Then the pair pressured towards February 21 and 22, daily lows around 0.8309 short of the figure, a zone of intense buying pressure, as witnessed by the EUR/GBP reaction, jumping almost 80-pips towards the daily high at 0.8380.

In the meantime, on Thursday, the EU and UK dockets witnessed ECB and Bank of England’s (BoE) officials speaking. Regarding ECB’s speaking, Stoumaras member of the ECB, mentioned that the APP would remain until the end of 2022, while Holzman commented that the Ukraine conflict would delay the end of QE. Regarding inflation, ECB Schnabel said that it is higher than expected and broadening but emphasized it would tame under 2% in the year.

In the meantime, BoE member Ben Broadbent said that “QT is not intended to be an active monetary policy instrument, the bank reate will be.”

Therefore, as noted by central bank speaking, it appears that some ECB hawks are easing their hawkish tone amid the Ukraine conflict, so the shared currency could weaken in the near term, influenced by Ukraine developments. Contrary, the Bank of England (BoE) has pushed back against aggressive hiking rates, something worth noting, as Bailey pushed back on Wednesday, saying there are two-sided risks to the inflation forecast.

EUR/GBP Price Forecast: Technical outlook

The EUR/GBP price action in the last three days, as depicted by the daily chart, is not clear. However, the EUR/GBP daily moving averages (DMAs) above the exchange rate could suggest it is downward biased, but at the moment is neutral.

Upwards, the EUR/GBP resistance levels would be the 50-DMA at 0.8378. Breach of the latter would open the door towards 0.8400, followed by the 100-DMA at 0.8428. On the flip side, February 23 daily high at 0.8354 would be the first line of defense for EUR/GBP bulls, followed by 0.8309, and then February 3 daily low at 0.8284.

New US sanctions on Russia are not expected to severely target the energy sector reported Politico on Thursday, as cited by Reuters. Russian energy giant Rosneft is not expected to be a target of a new sanctions package, Politico continued. 

Market Reaction

Markets remain on tenterhooks watching developments in the war in Ukraine and the world's reaction. Whilst failure to target Russia's energy sector and deal the country currently in the process of invading Ukraine the most severe economic pain may draw ire from some critics pushing for a stronger response, a softer US response may be treated positively by markets. If the Russian energy sector is not targeted, this would lower the potential global inflationary risks associated with the current Ukraine/Russia conflict, lessening one layer of uncertainty.     

Richmond Fed President and FOMC member Thomas Barkin said on Thursday that he hopes the Fed can restore interest rates back to pre-pandemic levels fairly quickly, reported Reuters. Barkin added that it is timely to normalise rates given strong demand, the tight labour market and high inflation. Barkin said that he expects goods prices will be disinflationary or perhaps even deflationary, offsetting a rise in service prices. 

Cleveland Fed President and FOMC member Loretta Mester said on Thursday that she doesn't think raising interest rates by 50bps in March is compelling, according to Reuters. 

Additional Remarks:

• Mester personally believes labor force participation will continue to move up from current levels but it is complicated to know when and by how much.
• Tightness in the labor market is not going to magically disappear any time soon and officials have to consider that for monetary policy.
• Mester supports raising the fed funds rate in march
• The Fed will have more information on the situation in Ukraine and on inflation over time. 
• The Fed needs to have a series of movements for rate increases.
• A situation where the Fed raises rates once and stays steady for a year would not be appropriate now.

US President Joe Biden has been presented with a "menu" of options for potential cyberattacks designed to disrupt Russia's ability to sustain military operations in Ukraine, reported NBC News. Citing four unnamed sources, NBC News reported that no final decision had been made. 

• Spot silver hit its highest since last August above $25.50 but pulled back sharply to the $24.75 area.
• But as fighting in Ukraine intensifies and Western powers ready economic sanctions against Russia, silver may remain underpinned.

After hitting its highest level since August 2021 above the $25.50 per ounce mark earlier in the session as investors piled into safe-haven assets after Russia initiated war with Ukraine, spot silver (XAG/USD) have pulled back sharply. Prices are now back in the $24.75 region and retesting support in the form of earlier monthly highs, with on-the-day gains having been eroded to “just” 0.8% from more than 4.0% at earlier highs.

The pullback was not driven by any fundamental catalyst; indeed, the news coming out of Ukraine has remained grim throughout the day with non-stop fighting being reported across the country. Rather, sentiment took a slight turn for the better after the US open, with global equities bouncing a little from earlier lows. That seems to have triggered some quite aggressive profit-taking in spot silver. In the context of silver’s monthly performance (it is still over 10% higher in geopolitical tensions), Thursday’s pullback from highs is hardly catastrophic.

Ahead, as the fighting in Ukraine intensifies and investors remain uncertain about what sanctions Western nations will hit Russia with, and what economic impact these will have, geopolitical risk premia is set to remain elevated. That argues for ongoing support in precious metals markets, suggesting some traders might view Thursday’s US session pullback to the $24.70s as a dip-buying opportunity.

The Chernobyl power plant has been captured by Russian forces, an advisor to Ukraine's Presidential Office said on Thursday, Reuters reported. The advisor said that it is impossible to say whether or not the power plant is safe and warned that this is one of the most serious threats to Europe today. 

Market Reaction

There has not been any market reaction to the latest headlines regarding the Chernobyl power plant but fears about another disaster add another layer of uncertainty to the market.  

• WTI gained up to 7.60% in the day but retreated to $96.00 as bulls take a breath.
• Ukraine – Russia woes keep grabbing market players’ attention, so WTI’s could resume its rally in any moment.
• WTI Technical Outlook: If WTI bulls keep prices above $95.79, they could have a second chance towards $100.

The US crude oil benchmark, Western Texas Intermediate (WTI), is rallying 5% during the day, but at one time, it broke the $100 barrier for the first time since July 2014. At press time, WTI is trading at $96.28.

The market sentiment remains downbeat, attributed to Russia’s invasion of Ukraine, grabbing news headlines around the globe. During the Asian session, Russian President Vladimir putting announced that a special military operation in Ukraine was underway. The military deployment by Russia were bombers loaded with weapons, special forces, and the launch of missiles to Ukrainian command centers.

As the invasion grows, Western and NATO countries condemned the attack from Russia to Ukraine and are expected to impose another round of sanctions, harsher than the previous ones. Some of the sanctions that could be imposed are: freezing assets in the EU and blocking Russian banks to EU financial markets, while UK’s prime minister is pushing for Russia’s ejection of the SWIFT payment system.

Putting Ukraine/Russia’s woes aside, Iran Nuclear talks have improved, as reported by Iran’s top security official, that said that it is possible to achieve a good agreement regarding a nuclear deal, as reported by Reuters.

With the latest developments crossing the wires, the US is working on a plan with the International Energy Agency over a combined release of additional crude from strategic petroleum reserve, per Reuters sources.

Meanwhile, the US Energy Information Administration revealed its weekly report. They said that “working gas in storage was 1,782 Bcf as of Friday, February 18, 2022, according to EIA estimates. This represents a net decrease of 129 Bcf from the previous week. Stocks were 209 Bcf less than last year at this time and 214 Bcf below the five-year average of 1,996 Bcf. At 1,782 Bcf, the total working gas is within the five-year historical range,” as reported by the US EIA.

Market’s reaction to Putin announcing the invasion of Ukraine

WTI’s rallied from the $92.78 region towards $100.50, close to an $8.00 move, followed by a retracement towards the $96.20 area, as American traders got to their offices.

WTI Price Forecast: Technical outlook

WTI daily chart depicts the US crude oil benchmark is upwards, despite retreating from daily highs around $100.50. Nevertheless, to further extend the rally, WTI bulls will need a daily close above February 14 daily high at $95.79. If that is achieved, then WTI bulls would remain hopeful for a second attempt to breach and sustain the $100.00 mark.

Therefore, WTI’s first resistance level would be $96.00. Breach of the latter would expose crucial resistance levels. The next one would be $97.00, followed by August 2014 cycle high at $98.55, and then an attack towards $100.00.

UK PM Boris Johnson announced a raft of new sanctions against Russia in the UK parliament:

• UK to impose an asset freeze against all major Russian banks, including an immediate asset freeze against VTB. 
• UK to bring in legislation to prohibit the Russian state from raising sovereign debt. 
• UK on Tuesday to bring in legislation to prohibit all major Russian companies from raising finance of UK markets. 
• UK to introduce legislation to limit deposits that Russian nationals can hold in UK bank accounts. 
• UK will look to extend the full range of sanctions measures against Belarus.
• UK to sanction over 100 individuals, entities and subsidiaries.
• UK to ban aeroflot aircraft from landing in the UK. 
• UK to immediately suspend or prohibit all dual-use export licenses to Russia. 
• UK to lay legislation to prohibit a wide range of high tech exports to Russia, plus exports to the extractive industry. 

On SWIFT, Johnson said that nothing is off of the table. 

Cleveland Fed President and FOMC member Loretta Mester on Thursday said that the unfolding situation in Ukraine would be a consideration for the Fed when determining the appropriate pace at which to remove monetary policy accommodation, Reuters reported. Events in Ukraine have implications for the medium-run economic outlook in the US, she added, with geopolitical events adding some upside risks to the inflation forecast even as they put some downside risk to near-term growth forecasts. 

Accommodation will be removed at the pace necessary to bring inflation back under control while sustaining activity and healthy labour markets, Mester said. She added that she expects some improvement in inflation readings later in the year as demand moderates and capacity constraints begin to ease. Mester said she expects inflation to remain above 2.0% this year, with risks tilted to the upside.

• US dollar adds to gains across the board on American hours.
• AUD/USD remains under pressure, testing 0.7100.

The AUD/USD dropped further during the American session as cautions prevails across financial markets following Ukraine’s invasion. The pair bottomed at 0.7094, hitting the lowest level since February 14. It then rebounded rising back above 0.7100, although still remains under pressure.

The greenback continues to be the top performer, boosted by risk aversion. The DXY is up by 1.30%, at the highest since 2020. On American hours, US yields moved to the upside, giving more strength to dollar’s rally. The US 10-year yield rose to 1.95% and the 30-year to 2.26%.

US economic data came in above expectations. Initial and continuing claims dropped more than expected to 232K and 1.47M, respectably. Q4 GDP growth was revised higher from an annualized rate of 6.9% to 7%. New Home Sales fell to 801K. Market participants ignored US data as the focus remains in the Ukraine invasion and price action across financial markets.

Levels to watch

The sharp reversal in AUD/USD leaves the pair vulnerable to more losses in the short term. A consolidation under 0.7100, would clear the way for a test of the 0.7045/50 area (Feb 4 low). On the upside, a recovery above 0.7165 should alleviate the bearish pressure. Only a daily close above 0.7235 would suggest more gains ahead.

Technical levels

Ukraine's Ambassador to the US said on Thursday that the Ukraine government remains in full control of Kyiv and that Russian helicopters had been shot down just outside of the city. The attack is ongoing in many areas, he continued, but Ukraine intends to continue fighting and protecting its country. 

Russian President Vladimir Putin said on Thursday that we were forced to take these measures, referring to Russia's invasion of Ukraine earlier that day, according to Reuters. We had no other chance but to act differently given all of our previous attempts to change our situation were fruitless, he explained. Russia remains a part of the global economy and we do not plan to damage the system that we belong to, Putin continued, adding that our partners should understand that and not punish us out from this system. 

Atlanta Fed President and FOMC member Raphael Bostic said on Thursday that the Fed will be monitoring events in Ukraine closely to assess their potential economic and financial impact, according to Reuters. 

We need to tighten policy due to high inflation and a strong US economy, San Fransisco Fed President and FOMC member Mary Daly said on Thursday, according to Reuters.

Bank of England Deputy Governor Ben Broadbent said on Thursday that it is possible that the BoE's balance sheet could decline even as the bank rate falls, according to Reuters. The Monetary Policy Committee (MPC) does not intend quantitative tightening to be an active policy instrument, Broadbent added, noting that, instead, the bank rate would be.

Market Reaction

GBP has not reacted to Broadbent's comments with focus much more on geopolitics right now. GBP/USD was last trading 1.5% lower at annual lows underneath the 1.3350 level. 

The shock of war hanging over Europe has clouded the global economic outlook, European Central Bank executive board member Isabel Schnabel said on Thursday. 

Additional Remarks:

"Uncertainty speaks in favour of a gradual and data-dependent normalisation."

"Reversing the current exceptional measures has the potential to mitigate inflationary pressures."

"Ending net asset purchases when inflation is robustly converging to our target also credibly underlines that our actions are solely guided by our mandate, refuting concerns about fiscal dominance."

"Inflation has proven more persistent and more broad-based than expected."

"Labour market slack is being reabsorbed at a faster pace than anticipated and pipeline pressures continue to build up."

"Our sequencing is clear."

"Inflation is not only higher than expected, but price pressures are also visibly broadening."

"Current measured inflation would be even higher if the costs of owner-occupied housing were included."

"The broad-based nature of recent upward surprises implies that significant uncertainty remains as to when the inflation peak will eventually be reached."

"Inflation is unlikely to fall back below our 2% target this year."

"A faster and more frontloaded recovery, in turn, risks increasing pressure on wages."

"We are currently witnessing the strongest labour market in the history of the single currency."

"It is now becoming increasingly likely that, in the medium term, inflation will approach our 2% target from above, rather than from below."

UK PM Boris Johnson is pushing very hard for Russia to be kicked out of the SWIFT international payments system, the FT reported on Thursday. The UK paper said that such a move would deal a heavy blow to Russian banks and the country's ability to conduct international trade. The FT article said that the German Chancellor Olaf Scholz had on Thursday warned Johnson that his country would not support such a move and nor would the EU. Shortly after the FT report was published, Ukraine's foreign minister was on social media calling for Russia to be kicked out of SWIFT. 

Market Reaction

Markets remain jittery but the latest headlines do not appear to have provoked a reaction. 

• US dollar extends gains across the board amid risk aversion.
• Russian invasion into Ukraine shocked financial markets.
• EUR/USD trades at the lowest since May 2020.

The EUR/USD fell under 1.1120 hitting the lowest level since May 2020. The pair remains under pressure after the Russian military invaded Ukraine. The panic mode across financial markets is boosting the US dollar.

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So far on Thursday, EUR/USD lost more than 175 pips, the worst daily decline in months. The DXY is up by 1.41% above 97.50 at the strongest since July 2020.

Stocks in Wall Street are falling sharply but off lows. The Dow Jones is down by 2.05% and the Nasdaq by 1.05%.

During the last hours, the US dollar also gained momentum supported by a rebound in US yields highs. The US 10-year printed a fresh high at 1.93% and the 30-year climbed to 2.24%.

• US equity markets tumbled in line with their global peers and other risk assets on Thursday as Russia invaded Ukraine.
• But sentiment took a turn for the better at the open; US equities pared a decent portion of pre-market losses.
• The S&P 500 was last down just under 1.5%, having been as much as 2.6% down in the pre-markets.

US equity markets tumbled in line with their global peers and other risk assets on Thursday as worst fears were confirmed, with Russia commencing a full-scale invasion of Ukraine. Sentiment did take a turn for the better after the open of US trade, however, seemingly as a result of profit-taking by holders of short positions, or amid dip-buying. The S&P 500 was last trading in the 4170 area, having seen a substantial more than 1.5% rally from pre-market trade lows just above 4100. At current levels, the index trades with losses on the day of slightly more than 1.0%.

The rebound was driven by tech and growth stocks as investors flocked into US bonds, pushing yields down and reducing the opportunity cost of holding high earnings ratio stocks. The Nasdaq 100 index was last trading just 0.5% down just below the 13.5K level, a more than 3.0% rebound from pre-market trade lows just above 13.0K. Meanwhile, the Dow, an index more weighted towards economically sensitive stocks and less towards tech/growth, was last trading down about 1.9%, reflecting broader fears about the impact of the new European war on the global economy.

The US, UK and EU all promised to hit Russia with unprecedented economic sanctions, fanning investor fears the conflict will have a highly inflationary impact (European gas futures are already up around 50% on the day). “I do not think many investors have dealt with the combination of surging inflation, which was last really seen in the early 80s, combined with full-scale military operation in Europe, which again, the last time that happened was second world war,” observed one analyst. “It's a confidence knocker,” they added, “saying that this is sort of uncharted territory for a lot of people”.

• The USD/JPY is climbing in the week 0.38%, as demand for safe-haven currencies rises.
• USD/JPY plunged on Putin’s “special military operation” headline, but it is paring earlier losses.
• USD/JPY Technical Outlook: Upward biased in the daily and the 1-hour chart, but higher volatility levels, suggest following the markets in the short-term, caution is warranted.

USD/JPY rises sharply from daily lows around 114.40 to highs 115.30s amid the Russian invasion of Ukraine, which started on Thursday during the Asian Pacific session. That said, investors’ mood dampened as flows through safe-haven peers increased. At the time of writing, the USD/JPY is trading at 115.39.

During the Asian session, the UN hosted an emergency security council meeting. Around that time, Russian President Putin unveiled a speech announcing a “special military operation” in Ukraine, aiming to de-nazify and de-militarize the country.

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Market’s reaction

The USD/JPY initial reaction to newswires was downwards, with the pair plummeting 70 pips and breaking the 50-day moving average (DMA) at 114.87 on its way down and reached a daily low at 114.40. Once European traders got to their offices, the pair recovered its losses and some more, trading near February 23 daily highs at 115.20.

USD/JPY Price Forecast: Technical outlook

The USD/JPY Is upward biased, as shown by the daily chart from a technical perspective. The daily moving averages (DMAs) reside below the spot price, though it faces resistance around 115.52, November 24, 2021, daily high.

Due to geopolitical developments, it is suggested to take a short-term approach amid high volatility levels witnessed in the financial markets. That said, the USD/JPY 1-hour chart has a bullish bias, and USD/JPY would lean towards February 22 daily high at 115.24 as support. If the pair achieves to print a daily close above it, a move towards the 116.00 figure and YTD high at the 116.30 area is on the cards.

Upwards, the pair's first resistance would be February 17 daily high at 115.53, followed by February 16 cycle high at 115.79 and the February 15 115.82. On the flip side, the USD/JPY first support would be February 22 daily resistance turned support at 115.23. Breach of the latter would expose the 200-hour simple moving average (SMA) at 115.18, followed by the confluence of the 50-100 hour SMAs at 114.97 and 114.93, respectively.

According to a senior US defense official, the Russians are making a move on Kyiv, with their assaults thus far aimed at taking Ukraine's main population centres, reported Reuters. 

Additional Remarks:

• Russian action on Ukraine is an initial phase of a large-scale invasion.
• The US has seen Russian forces advance on three main axes of assault.
• One main axis is from Belarus to Kyiv.
• Russians have every intention of basically decapitating the Ukrainian government.
• More than 100 Russian launched missiles were used in the onslaught.
• Cruise, surface-to-air and sea-launched missiles were all used by the Russians.
• The United States hasn't seen Russian forces move into the western part of Ukraine, but this is still the initial phase of the attack. 
• Russian targets thus far focused primarily on military and defense objectives, including 10 airfields. 
• The US does not have a good sense of casualties.
• Russia used about 75 aircraft in the attack, though there were no indications of any amphibious assaults yet by Russian forces in Ukraine.
• The US does not believe the full scope of Russian electronic warfare capabilities have come into play, "and they may yet".
• US troops remain outside of Ukraine and continue to be postured to reassure allies.
• The US has seen indications that Ukraine is resisting and fighting back. 

• Gold prices dropped more than $50 from the daily high.
• XAU/USD now up modestly after a sharp correction.
• US dollar remains strong, US yields limit upside in gold.

Gold prices experience a sharp correction from the peak of $1974 to the $1920 area. It is now approaching $1940. Volatility remains at extreme levels in metals.

Equity prices are holding onto sharp losses across the globe amid the escalation of the Ukraine conflict. Russian troops invaded Ukraine on Thursday and triggered a rally in commodity prices, including gold.

During the last hours, US yields moved toward daily highs supporting the correction in gold prices.

Above the $1965 area, gold lost momentum, and after some stabilization near $1960, XAU/USD corrected quickly to as low as $1912. A break lower could trigger a deeper pullback. The following support stands at $1890.

On the upside, the immediate resistance is located at $1940; and a break higher could easily send XAU/UD to $1950. If the rally continues, a consolidation above $1965 should keep the road clear for $2000.

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Technical levels

Richmond Fed President and FOMC member Thomas Barkin said on Thursday that we will have to see if the Russian invasion of Ukraine changes the argument for policy normalisation. The US is not that exposed to the Russian economy, he said, stating that the Fed will need to watch how this effects energy markets and if the conflict expands.  

Market Reaction

The dollar has not been impacted and continues to derive support as a result of safe-haven demand. The DXY recently climbed to fresh year-to-date highs and is near 97.50. 

• New Home Sales fell 4.5% in January after December's 12.0% drop. 
• The US dollar did not react to the latest US data with geopolitics the main focus. 

Following a massive 12.0% MoM surge (which was upwardly revised from a 11.9% gain) in the number of New Home Sales in the past 12-months in December, the 12-month rolling number of New Home Sales was down 4.5% in January, data published by the US Commerce Department showed on Thursday. That meant the number of New Home Sales in the US over the past 12 months dropped to 801K in January from 839K the month prior, a tad less than the 806K expected. 

Market Reaction

The US dollar did not react to the latest US data with geopolitics the main focus. 

• USD/TRY clocked new YTD peaks around 14.60.
• The lira comes under pressure on geopolitical concerns.
• Yields of the Turkey 10y bond rose to multi-week highs past 23%.

Sellers remain in control of the sentiment surrounding the Turkish lira and pushed USD/TRY to fresh cycle peaks around 14.60 earlier in the session.

USD/TRY: An imported currency crisis in the offing?

USD/TRY extended the uptrend for the fifth consecutive session on Thursday, as the selling pressure around the lira intensified after Russia attacked Ukraine early on Thursday.

The worsening geopolitical scenario pushes crude oil prices and gold to fresh cycle highs, while the greenback navigates at shouting distance from 2022 peaks when tracked by the US Dollar Index, all key factors weighing on the Turkish currency.

In addition, yields of the Turkey 10y benchmark bond climb to levels last seen in early January above the 23.0% level, in stark contrast with the performance of the bonds markets overseas.

USD/TRY key levels

So far, the pair is advancing 2.73% at 14.1860 and a drop below 13.4317 (weekly low Feb.11) would expose 13.2327 (monthly low Feb.1) and finally 12.7523 (2022 low Jan.3). On the other hand, the next up barrier lines up at 14.6052 (2022 high Feb.24) seconded by 18.2582 (all-time high Dec.20).

• GBP/USD has been on the back foot relentlessly on Thursday, dropping from around 1.3550 to current levels under 1.3350.
• The pair is on course for its biggest one-day drop since September 2020 amid risk-off amid Russia’s invasion into Ukraine risk-off.
• Economic uncertainty seems to be weighing particularly hard on GBP, as the BoE tightening outlook is dampened.

Key levels of support have fallen like dominoes on Thursday as GBP/USD continues to succumb to woes related to Russia’s broad/ongoing assault on Ukraine. As traders ditch risk-sensitive currencies like sterling in favour of safe-haven currencies like the US dollar or Japanese yen as global equities tumble, GBP/USD is on course for its biggest one-day drop since September 2020 of roughly 1.5%. That drop has seen the pair fall from the 1.3550 area to current levels under 1.3350 and, in doing so, fall below key support at 1.3500 and 1.3360 to print fresh annual lows.

Such a big intra-day move might have some traders questioning whether the bears might soon run out of steam. Typically, some amount of mean reversion might be expected for GBP/USD after such a big intra-day drop. That suggests hopes for the pair to test sub-1.3200 2021 lows may have to wait. But with recent geopolitical developments having thrown the outlook for the global economy and central bank policy into uncertainty, GBP/USD’s near-term bias may well remain negative. Any rebound back towards 1.3400, say, may be viewed as a good opportunity for the sellers to reload on positions.

The UK economy was already faced with the prospect of a large hit to living standards in the form of higher taxes, energy prices and phone bills (the latter two starting as of Q2). The latest surge in gas and oil prices (UK gas futures rose more than 30% on Thursday) amid expectations of supply disruptions from Russia due to the West’s sanction response only darkens the outlook. BoE policymakers have in recent days emphasised that upcoming policy tightening will be “moderate” and the latest developments will further dampen tightening expectations. That probably partly explains why on Thursday, GBP has been one of the worst-hit G10 currencies versus the US dollar.

A nuclear waste storage facility in Chernobyl, Ukraine was destroyed after Russian forces entered and fighting broke out, an advisor to the Ukrainian Interior Ministry told NBC. The advisor warned that radioactive dust could cover the territories of Ukraine, Belarus and the EU. 

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• The USD/CHF keeps fluctuating in the week, but the Russian invasion increased demand for the greenback, in the day is up 0.64%.
• USD/CHF Technical Outlook: The pair in the short-term is upwards, but geopolitical headlines rule price action, caution is warranted.

On Thursday, the USD/CHF rallies from the 0.9170 area towards 0.9250 on safe-haven flows attributed to Russia’s invasion of Ukraine, which began during the start of the Asian session, impacting negatively the market mood. At press time, the USD/CHF is trading at 0.9225.

During the Asian session, we had the UN security council meeting, and as the meeting was taking place, Russian President Vladimir Putin released a speech announcing a special military operation in Ukraine, aiming to de-militarize the country.

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Market’s reaction

The USD/CHF barely moved in the initial reaction to the headline. Nevertheless, as the European session got underway, the pair jumped 50+ pips, reaching a daily high at 0.9247.

USD/CHF Price Forecast: Technical outlook

The USD/CHF is neutral in the daily chart from a technical perspective. During the day, so far broke upwards, leaving behind all the daily moving averages (DMAs), but it is worth noting that happened in the last four trading days.

Current geopolitical developments suggest taking a short-term look due to the volatility implied in such events. The USD/CHF 1-hour chart depicts the pair broke ALL the simple moving averages (SMAs) and will lean to February 23 high and the 200-hour SMA confluence around the 0.9212-18 as the first support. As long as the pair remains above, upward moves towards the daily high at 0.9247 might be on the cards. Otherwise, bearish sentiment will overtake the current bullishness of the USD/CHF.

Upwards, the USD/CHF resistance levels lie in the daily high at 0.9247, followed by February 16 high at 0.9261, and February 15 daily high at 0.9274. On the flip side, the first support would be the abovementioned 0.9212-18 area, followed by the figure at 0.9200 and today’s daily low at 0.9172.

EUR/USD sinks to the the mid-1.1100s. The 2022 low at 1.1121 emerges as the next target – removal of which would clear the way for a substantial drop to the 1.07 area, economists at Scotiabank report.

EUR fall may steady in the low/mid 1.11s in the short-run

“EUR/USD is experiencing a sharp intraday selloff – the largest 1-day decline since March 2020 – which leaves the late Jan low at 1.1121 exposed.”

The EUR fall may steady in the low/mid 1.11s in the short-run but the broader outlook for the EUR deteriorates quite significantly in the short-to-medium term if the EUR trades below 1.11.” 

“After recent rejections of 1.15, a potential double top has developed on the daily chart which would be triggered on a break of 1.1121 (and would target a drop to the 1.07 area).”

USD/CAD has moved up through the low/mid 1.28 area. Economists at Scotiabank believe that the pair could reach the 1.20/30 region.

Support seen at 1.2800/1.2790

“Technically, additional gains look more than likely from here and although the situation can change quickly, it might not change quickly enough to stop USD/CAD from pushing on to the 1.29/1.30 zone.”

“Support is 1.2790/00 now.”

German Defense Minister Christine Lambrecht said on Thursday that Berlin is ready to comply with further NATO requests, as well as to extend support to NATO air policing in Romania. There will be tangible and painful sanctions for Russia, he added. 

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The S&P 500 saw an aggressive fall yesterday of nearly 2%. Analysts at Credit Suisse look for a clear break (and ideally weekly close) below 4199 to signal an important change of trend lower with the next meaningful support seen at 3855/15.

Break of 4223/4199 to establish a major “head & shoulders” top

“We look for a clear break (and ideally weekly close) below 4199 to mark the completion of a large ‘head & shoulders’ top to signal an important change of trend lower. We would then see next support at 4122/17 ahead of the lows from May last year at 4061/57.” 

“Whilst we would look for an initial hold at 4061/57 we would expect a break in due course with the next meaningful support seen at the 38.2% retracement of the entire 2020/2021 bull market at 3855/15. The ‘measured top objective’ though is seen set lower at 3625/20.” 

“Resistance is now seen at 4267 initially, then 4310, with the immediate risk seen lower whilst below 4342.”

• USD/CAD broke out of a multi-week-old trading range and shot to a near two-month high.
• Russia-Ukraine crisis boosted the safe-haven USD and remained supportive of the move.
• Rallying oil prices extended support to the loonie and capped gains, for the time being.

The USD/CAD pair retreated a few pips from a near two-month high set during the mid-European session and was last seen trading around the 1.2820 region, still up 0.70% for the day.

The brutal market reaction to Russian President Vladimir Putin's announcement on Thursday to launch a special military operation in Ukraine forced investors to take refuge in the safe-haven US dollar. This, in turn, assisted the USD/CAD pair to gain strong positive traction and breakout of a near four-week-old trading range.

Since the pre-dawn attack, Russian forces have reportedly destroyed Ukrainian military bases and air defence systems. Missiles have targeted major Ukrainian cities, including the capital Kyiv, and explosions were seen in cities along the coast. Moreover, Russian troops continued to cross the Ukrainian border from several directions.

How is Russian-Ukraine war impacting financial markets? Follow our live coverage updates!

The worsening situation in Ukraine kept investors on the edge and pushed the greenback back closer to the 2022 high touched in January. That said, a blowout rally in crude oil prices extended some support to the commodity-liked loonie and turned out to be the only factor that kept iid on any further gains for the USD/CAD pair, for the time being.

On the economic data front, the Prelim US Q4 report showed that the economy expanded by 7.0% during the fourth quarter of 2021, matching the original estimates. Separately, the US Weekly Initial Jobless Claims fell to 232K the last week from the 249K previous. The data did little to influence the USD or provide any impetus to the USD/CAD pair.

Hence, the market focus will remain glued to developments surrounding the Russia-Ukraine saga, which will play a key role in driving the risk sentiment and the USD demand. Nevertheless, sustained break through the aforementioned trading range hurdle, around the 1.2780-1.2785 region, supports prospects for additional gains for the USD/CAD pair.

Technical levels to watch

• EUR/USD collapses to fresh lows in the mid-1.1100s.
• The 2022 low at 1.1121 emerges as the next target.

EUR/USD tanks to the 1.1150 region following increasing risk aversion on Thursday.

Such a sharp move now paves the way for a probable challenge of the YTD low around 1.1120 (January 28). Further down, there are no support levels of note until the round levels at 1.1100 followed by 1.1000.

The negative outlook for EUR/USD is expected to remain unchanged while below the key 200-day SMA, today at 1.1622.

EUR/USD daily chart

• US BEA revised Q4 GDP growth to 7% as expected.
• US Dollar Index holds above 97.00 after the data.

The US Bureau of Economic Analysis (BEA) announced on Thursday it revised the annualized Gross Domestic Product growth in the fourth quarter to 7% in its second estimate from 6.9% in its initial estimate.

This reading came in line with the market expectation. 

"The updated estimates primarily reflected upward revisions to nonresidential fixed investment, state and local government spending, and residential fixed investment that were partly offset by downward revisions to personal consumption expenditures (PCE) and exports," the BEA explained its publication.

Market reaction

The US Dollar Index showed no immediate reaction to this data and was last seen rising 1% on the day at 97.15.

• AUD/USD witnessed aggressive selling and reversed its gains recorded over the past three sessions.
• Russia-Ukraine conflict benefitted the safe-haven USD and weighed on the perceived riskier aussie.
• Investors now eye US data, though the focus will remain on geopolitics and the situation in Ukraine.

The AUD/USD pair maintained its heavily offered tone through the mid-European session and was last seen trading around the 0.7165 region, or the one-week low.

Russian military forces invaded Ukraine earlier this Thursday and fired missiles at several Ukrainian cities. Reports indicated that as many as 40 Ukrainian soldiers and 10 civilians were killed by Russian shelling. Ukraine added that troops continue to pour across its borders into the eastern regions and landing by sea at the cities of Odesa and Mariupol in the south.

The worsening situation in Ukraine triggered a massive sell-off in the global equity markets. Investors rushed to take refuge in traditional safe-haven assets, which boosted the US dollar and prompted aggressive selling around the perceived riskier aussie. The bearish pressure remained unabated amid fears about a further escalation in tensions between Russia and the West.

The United States and its allies were quick to condemn Russia's actions and President Joe Biden said that he would meet the leaders of G7 to map out more severe measures against Russia. This, in turn, kept investors on the edge, which was evident from the ongoing freefall in the financial markets and forced the AUD/USD pair to reverse its gains recorded over the past three trading sessions.

Market participants now look forward to the US economic docket, highlighting the release of the Prelim GDP report and the usual Weekly Initial Jobless Claims. The data, however, might do little to influence the USD price dynamics. The focus remains on developments surrounding the Russia-Ukraine saga, which will drive the broader risk sentiment and provide some impetus to the AUD/USD pair.

Technical levels to watch

• DXY posts strong gains and reclaims the area above 97.00.
• The next hurdle of note comes at the YTD top at 97.44.

DXY rallies and regains the key barrier at 97.00 the figure on the back of the Russia-Ukraine military conflict.

The continuation of the upside is expected to challenge the 2022 high past 97.40 recorded on January 28. If cleared, the next hurdle is seen at 97.80 (June 30 2020 high).

The short-term constructive stance remains supported by the 5-month line, today near 95.50, while the outlook for the dollar is seen as positive above the 200-day SMA at 93.86 in the longer run.

DXY daily chart

European Commission President Ursula von der Leyen said on Thursday that the stability of Europe is at stake, as reported by Reuters.

Additional takeaways

"Sanctions will suppress Russia's economic growth."

"Want to cut Russian indsutry from the technology needed today to build future."

"Sanctions will seriously degrade the Russian economy."

Market reaction

These comments don't seem to be helping the shared currency to stage a recovery. The EUR/USD pair, which fell to a multi-week low of 1.1155 earlier in the day, was last seen trading at 1.1172, where it was down 1.2% on a daily basis.

External drivers have been the major drivers for the AUD/USD pair. This should remain the case in the current market environment, which could drag the aussie down below the 0.71 level, analysts at ING report.

External factors remain in the driver’s seat

“AUD is less exposed than European currencies to swings in the Russian ruble (RUB) but given its high-beta to risk sentiment, the aussie is still facing considerable downside risks.”

“Incidentally, the iron ore sell-off as China aims to curb price speculation can also be a drag on AUD.”

“With no help from the RBA, AUD/USD could move back below 0.7100 in the near-term as the external environment deteriorates.”

"Russia's deliberate choice to attack Ukraine violated United Nations' rules," French President Emmanuel Macron said in a televised address to the nation, as reported by Reuters.

Additional takeaways

"France stands besides Ukraine."

"Freedom of Ukraine is our freedom."

"Putin has chosen to ignore Ukraine's sovereignty."

"Putin has chosen to put at peril the peace of Europe."

"We will respond without weakness to this act of war."

"We will ask Russia to hold itself to account at United Nations."

"Sanctions against Russia will factor in the energy sector, and will be without weakness."

"There will be long-standing consequences from Russia's actions on Ukraine."

"Will do everything to protect France and French people in Ukraine."

"We will not give in to anything regarding our unity."

Market reaction

The US Dollar Index consolidates its daily gains following these comments and was last seen rising 1% on the day at 97.14.

EUR/CHF went briefly below 1.03 this morning. If Ukraine tensions escalate further, the pair will trade below the aforementioned level, economists at Danske Bank report.

When tension ease, EUR/CHF will trend higher

“As long as uncertainty remains high, EUR/CHF will trade to the low side and is likely to move below 1.03 near-term if the situation escalates further.” 

“Whenever the situation eases, we expect the cross to move higher again.”

See: EUR/CHF to tank towards 1.00 if situation in Ukraine worsens further – ING

Rising energy costs are set to weigh on the euro. Subsequently, the EUR/USD could fall towards the 1.11 level, economists at Danske bank report.

Higher energy prices to hit the euro

“At present, it seems unlikely to talk about de-escalation and further downside to EUR/USD is probably realistic at the present stage in the conflict (as energy costs potentially spike further, spot can drop towards 1.11) – assuming next up we see pictures of war and politicians need to step up.”

“Downside in EUR/USD is equally amplified by many turning EUR-positive after the recent ECB meeting.”

“We continue to forecast 1.08 in 12M.”

• EUR/JPY breaches 128.00 to record new 2022 lows.
• Further down now comes the December 2021 low near 127.50.

EUR/JPY adds to Wednesday’s retracement and drops sharply below the 128.00 mark on Thursday.

Further losses in EUR/JPY now faces the next support of note at the December 2021 low in the mid-127.00s (December 20), while a breach of this level should target the February 2021 low at 126.10 (February 4).

Further downside in the cross is likely as long as it remains capped by the 2-month line, today near 128.90. On the longer term, the outlook for the cross is seen as negative while below the 200-day SMA, today at 130.36.

EUR./JPY daily chart

AUD/USD has quickly turned back lower. A break below key short-term support at 0.7164 would turn the risks back lower, but still within the context of the short-term range, with more important supports back at 0.7086/49, analysts at Credit Suisse report.

AUD/USD set to settle into a broader short-term range

“Key support is seen at the 55-day average, uptrend from the 2022 lows and recent price low around 0.7164. Below here would quickly turn the short-term risks back lower within what we now expect to be a broader range. Next key support is seen at 0.7086, then eventually 0.7063/49.” 

“Only a move below 0.7063/49 would definitely reinstate the medium-term downtrend, which we still view as intact, given that the market remains below the falling 200-day average and the weekly MACD remains bearish, with scope for the YTD lows 0.6972/62 to be challenged in that scenario.” 

“Our base case is that the market is set to settle into a broader short-term range, with 0.7315/38 expected to provide a solid cap on the topside.”

• USD/CHF caught aggressive bids on Thursday and jumped to over a one-week high amid stronger USD.
• Russia’s invasion of Ukraine benefitted the USD’s status as the reserve currency and extended support.
• Sustained strength beyond the 0.9220 resistance zone might have set the stage for additional gains.

The USD/CHF pair built on its intraday bullish momentum and jumped to over a one-week high, closer to mid-0.9200s during the mid-European session.

The fast-paced developments that began after Russian President Vladimir Putin announced a military operation in Ukraine boosted the US dollar's status as the global reserve currency. This, in turn, assisted the USD/CHF pair to attract fresh buying on Thursday and rally nearly 80 pips from the vicinity of the very important 200-day SMA, around the 0.9175 region.

Reports indicated that Russian forces attacked the Ukrainian border around Belarus and also fired missiles at several Ukrainian cities. As many as 40 Ukrainian soldiers and 10 civilians were killed by Russian shelling. Ukraine added that troops continue to pour across its borders into the eastern regions and landing by sea at the cities of Odesa and Mariupol in the south.

US President Joe Biden condemned Russia and called the attack unprovoked and unjustified. He further promised that the US and its allies will respond in a united and decisive way, and impose severe sanctions on Russia. This further fueled worries about a major conflict between Russia and the West, which forced investors to continue dumping perceived riskier assets.

The worsening situation in Ukraine forced investors to scale back their expectations for a more aggressive policy response by the Fed to combat stubbornly high inflation. This, along with the global flight to safety, triggered a steep decline in the US Treasury bond yields. This could act as a headwind for the greenback and cap gains for the USD/CHF pair.

That said, sustained strength and acceptance beyond the 0.9215-0.9220 horizontal resistance could be seen as a fresh trigger for bullish traders and might have already set the stage for additional gains. This, in turn, suggests that the path of least resistance for the USD/CHF pair is to the upside and any meaningful pullback could be seen as a buying opportunity.

Market participants now look forward to the US economic docket, highlighting the release of the Prelim GDP report and the usual Weekly Initial Jobless Claims. The data, however, might do little to influence the USD price dynamics or provide any meaningful impetus to the USD/CHF pair as the focus remains on developments surrounding the Russia-Ukraine saga.

Technical levels to watch

Russia has launched a full attack on Ukraine. Commodity markets reacted swiftly to the developments. Strategists at Danske Bank see clear upside risks to oil and gas prices.

Upside potential for some metal and wheat prices

“The market price a premium on broad commodity space due the risk that Russia will hit by sanctions which will affect its exports.”

“European natural gas prices spike back towards recent highs and Brent jumps above $100/bbl mark.”

“Wheat and aluminium prices have increased sharply today. We see the gas prices could surge to above EUR200 MWH if harsh sanctions are imposed on Russia.”

EUR/JPY has collapsed lower for a break of its uptrend from May 2020. A break below 128.26 can see weakness extend to the December lows at 127.51/38, economists at Credit Suisse report.

Initial resistance located at 129.00 

“A close below the late January lows at 128.34/26 can see the immediate risk stay lower for a move back to the December lows at 127.51/38.”

“Although a fresh hold here should be allowed for, we would see scope for a move below the December lows at 127.51/38 in due course to retest the medium-term channel bottom at 127.06, with the 38.2% retracement of the 2020/2021 bull trend at 126.59.” 

“Resistance is seen at 129.00 initially, with 129.35 now ideally capping to keep the immediate risk lower. Above can see strength extend back to 129.54, potentially 130.01/11.”

British Prime Minister Boris Johnson his delivering his remarks on the Russian invasion of Ukraine.

Key quotes

"Our worst fears have now come true."

"Putin has unleashed a war on our European continent."

"We and the world cannot allow Ukraine's freedom to be snuffed out."

"We cannot and will not look away."

"We will do what more we can in the days ahead on providing Ukraine with defensive weaponry."

"With our allies, we will agree on a massive package of economic sanctions designed in time to hobble the Russian economy."

"We must collectively cease dependence on Russian oil and gas."

"This hideous and barbaric venture of Putin must end in failure."

"We will do everything to keep Britain safe."

"We will work with allies for however long it takes to ensure sovereignty and independence of Ukraine is restored."

Market reaction

The UK's FTSE 100 Index was last seen losing more than 3% on the day at 7,268.

• GBP/USD plunged to a fresh monthly low amid a global rush to safe-haven assets, including the USD.
• Russia’s invasion of Ukraine spooked investors and triggered a massive sell-off in the equity markets.
• Technical selling below the 1.3500 mark also seems to have contributed to the steep intraday decline.

The GBP/USD pair added to its heavy intraday losses and tumbled to a fresh monthly low, below the 1.3400 mark during the mid-European session.

Following the recent repeated failures ahead of mid-1.3600s, the GBP/USD pair witnessed aggressive selling on Thursday and finally broke down of a more than three-week-old trading range. Investors dumped riskier assets and rushed to take refuge in traditional safe-haven assets after Russia launched an all-out invasion of Ukraine. This, in turn, provided a strong boost to the US dollar and exerted heavy downward pressure on the major.

It is worth mentioning that Russian President Vladimir Putin authorized a special military operation in Donbas earlier today. Moreover, reports indicated that Russian forces attacked the Ukrainian border around Belarus and also fired missiles at several Ukrainian cities. Ukraine added that troops were pouring across its borders into the eastern Chernihiv, Kharkiv and Luhansk regions, and landing by sea at the cities of Odesa and Mariupol in the south.

The headlines continued weighing on investors' sentiment and led to a steep decline across the global equity markets. Moreover, the geopolitical developments could dampen prospects for a 50 bps rate hike by the Bank of England at its March meeting. This was seen as another factor that undermined the British pound and further contributed to the GBP/USD pair's sharp decline, which took along some short-term trading stops below the 1.3500 psychological mark.

Hence, the downfall could further be attributed to some follow-through technical selling. A subsequent slide below the 1.3400 round figure now seems to have set the stage for the retest of 2022 low, around the 1.3360-1.3355 region. The latter should act as a pivotal point, which if broken decisively will be seen as a fresh trigger for bearish traders. Traders now eye the Prelim US GDP report for some impetus, though the focus remains on the situation in Ukraine.

Technical levels to watch

Economist at UOB Group Barnabas Gan reviews the latest inflation figures in Singapore.

Key Takeaways

“Singapore’s consumer prices rose at its fastest rate since Feb 2013 at 4.0% y/y (+0.0% m/m sa) in Jan 2022, due to higher food and oil prices. This is slightly lower compared to market expectations for a 4.2% y/y print, albeit closer to our outlook of 3.9% y/y.”

“Inflation risks are still being felt at this juncture, given that headline inflation has climbed for five straight months. Core inflation has also accelerated to 2.4% y/y in Jan 2022 (from 2.1% prior), marking the second month that core inflation is above the 2.0% handle. The authorities have kept their headline and core inflation outlook unchanged at 2.5 - 3.5% and 2.0 - 3.0% respectively.”

“We expect headline inflation to stay above the 3.0% handle at least into the first half of 2022, while core inflation could remain at 2.0% or higher for the remaining part of the year. Given the inflation risks, we maintain our call for MAS to further normalise monetary policy in April 2022.”

NATO Secretary General Jens Stoltenberg said on Thursday that Russia is using force to try to rewrite history, as reported by Reuters.

Additional takeaways

"NATO will deploy capabilities and forces including NATO Response Force."

"Already strengthening collective defence."

"Over 100 jets at high alert protecting our airspace."

"Will continue whatever necessary to shield alliance from aggression."

"will call virtual NATO leader summit tomorrow."

Market reaction

Investors continue to seek refuge during the European trading hours and the greenback gathers strength as a safe haven. As of writing, the US Dollar Index was trading at its highest level since late January at 97.20, rising more than 1% on a daily basis.

Citing Ukrainian border officials, Reuters reported on Thursday that the Russian military was trying to break into the Kyiv region.

"Russian military tried to break into Ukraine's Zhytomyr region on Belarus border, using grad rocket systems," officials added.

Market reaction

Safe-haven flows continue to dominate the financial markets following this headline. The EUR/USD pair was last seen losing 1.3% on a daily basis at 1.1162, Gold was up 3.25% at $1,971 and the barrel of West Texas Intermediate was rising more than 8% near $100.

Lee Sue Ann, Economist at UOB Group, comments on the recently released wage growth results in the Australian economy.

Key Takeaways

“Australia’s wage price index rose 0.7% q/q in seasonally adjusted terms for 4Q21.The quarterly increase was in line with estimates, and a tad higher than 3Q21’s reading of 0.6% q/q. On an annual basis, the index was up 2.3% y/y, slightly higher than the previous reading of 2.2% y/y.”

“The Reserve Bank of Australia (RBA) has repeatedly said that wage growth beyond 3% is needed to help convince it that inflation is back within the 2-3% target band. Although wages came in at the fastest seasonally adjusted increase since 3Q18, the gain lagged the increase in consumer prices.”

“While further tightening in the labour market should see wage growth continue to rise, this would only occur at a gradual pace, and not at a pace that is likely to bring the RBA off the sidelines in coming months to raise interest rates for the first time since 2010. We still look for rate hikes only in 2023, though we now flag the potential risk for that to occur earlier than our projection. The next RBA monetary policy meeting is on 1 Mar.”

Russian President Vladimir Putin is endangering the lives of countless people in Ukraine, German Chancellor Olaf Scholz said on Thursday, as reported by Reuters.

Additional takeaways

"This is Putin's war."

"I spoke to Zelenskyy this morning and assured him of our full solidarity."

"I have asked for a special session of the German parliament on Sunday."

"I will call a conference of G7 leaders for today."

"Aim of sanctions to make clear to Russian leadership they will pay a bitter price."

"Putin has made a serious error with this war."

"To our partners in central and eastern Europe: we understand your fears and stand with you."

"This evening I will go to Brussels to meet EU leaders."

"I call on Putin immediately to stop the attack, he must fully withdraw his troops from Ukraine."

Crude oil prices are on the run amid the Russia/Ukraine crisis. The barrel of WTI is trading around $100 a barrel for the first time since July 2014.

• Silver gained strong traction on Thursday and rallied to the highest level since November 2021.
• The momentum confirmed a fresh bullish breakout and supports prospects for additional gains.
• Overbought technical indicators warrant some caution before placing aggressive bullish bets.

Silver continued scaling higher through the first half of the European session and shot to the highest level since August 2021, closer to mid- $25.00s in the last hour.

The overnight sustained break through the $24.30-$24.35 confluence barrier, comprising of 200-day SMA and a descending trend-line extending from July 2021, was seen as a fresh trigger for bullish traders. The emergence of some dip-buying on Thursday near the said resistance breakpoint now turned support, reaffirmed the constructive set-up and lifted to the XAG/USD.

The momentum pushed the white metal beyond the previous YTD high, around the $24.70 area, and the top boundary of an upward sloping channel, stretching from the $22.00 mark or the monthly low. A subsequent move beyond the $25.00 psychological mark seems to have prompted aggressive technical buying and further contributed to the strong follow-through upward trajectory.

Technical indicators, however, are flashing extremely overbought conditions on the daily and hourly charts. This, in turn, makes it prudent to wait for some near-term consolidation or modest pullback before positioning for any further appreciating move. Nevertheless, the bias seems tilted firmly in favour of the XAG/USD bulls and supports prospects for further gains.

On the flip side, any meaningful decline might find decent support near the aforementioned ascending channel resistance breakpoint, currently around the $25.00 mark. A further downfall is more likely to attract fresh buying and remain limited near the $24.70 area. The next relevant support is pegged near the $24.45 region, which should act as a near-term base for the XAG/USD.

Silver daily chart

Technical levels to watch

“Urgency and consensus are an utmost priority at the moment.” “At this stage it meant no move on SWIFT, because doing so would have such wide-ranging consequences, also in Europe, Reuters reported, citing an EU diplomat.

“We know that cutting Russia off from SWIFT is the 'nuclear option' - appears some EU politicians want to keep hold of that card for now, the EU official added.

Read: EUR/USD meets some support near 1.1200, looks to geopolitics

Bank of England (BOE) Chief Economist Huw Pill said Thursday, “BOE will seek to bring inflation down in a “measured way” and “in a way that doesn’t disturb the rest of the economy.”

Additional comments

• GBP/USD Forecast: Pound to suffer losses if 1.3440 support fails on risk-aversion

Corn has extended its up move after breaking above the peak of last year at 640. Strategists at Société Générale expect corn prices to reach the 745/50 area.

Initial support aligns at 675/668

“Daily MACD is firmly anchored within positive territory which denotes upside momentum is persistent.” 

“Corn looks poised to head towards next projections at 735 and 745/750. This could act as interim resistance however a large downside is not envisaged.”

“Daily Tenkan line at 675/668 is first support near-term.”

• EUR/USD collapses to monthly lows in the sub-1.1200 area.
• Risk-off sentiment picks up pace on Russia-Ukraine war.
• US flash Q4 GDP, weekly Claims next of relevance in the docket.

The selling pressure around the single currency (and the risk complex in general) picked up extra pace and dragged EUR/USD to the area below the 1.1200 yardstick on Thursday.

EUR/USD weaker on Russian invasion, safe haven demand

EUR/USD adds to Wednesday’s pullback and starts the second half of the week deeply into the negative territory following the heightened demand for the greenback, all in response to broad-based rising inflows to the safe haven universe.

On the latter, the greenback gathered extra steam after Russia sets in motion its invasion to Ukraine early on Thursday, putting the risk complex under strong downside pressure and bolstering the demand for the safer assets like the dollar, yen, Swiss franc and bonds.

Indeed, money markets on both sides of the ocean show a renewed buying interest, which depress US 10y yields to the sub-1.90% area and drag yields of the German 10y Bund below 0.15%.

There are no releases in the domestic calendar, whereas another revision of Q4 GDP figures, usual weekly Claims and New Home Sales are all due across the pond.

What to look for around EUR

EUR/USD continues to look to the geopolitical scenario and risk appetite trends for near-term direction. On this, the recent deterioration of the Russia-Ukraine front is expected to keep the pair under pressure amidst solid risk-off sentiment. In the meantime, bouts of strength in the pair should remain underpinned by speculation of a potential interest rate hike by the ECB probably sooner than many anticipate, higher German yields, persevering elevated inflation and a decent pace of the economic activity and auspicious results from key fundamentals in the region. The threat to this view, as usual, comes from the Fed and a potential tighter-than-expected start of the normalization of its monetary conditions.

Key events in the euro area this week: Eurogroup Meeting, Germany Final Q4 GDP, EMU Final Consumer Confidence, ECB Lagarde (Friday).

Eminent issues on the back boiler: Asymmetric economic recovery post-pandemic in the euro area. Speculation of ECB tightening/tapering later in the year. Presidential elections in France in April. Geopolitical concerns from the Russia-Ukraine conflict.

EUR/USD levels to watch

So far, spot is losing 0.95% at 1.1195 and faces the next up barrier at 1.1326 (55-day SMA) followed by 1.1390 (weekly high Feb.21) and finally 1.1395 (weekly high Feb.16). On the other hand, a drop below 1.1193 (monthly low Feb.23) would target 1.1186 (monthly low Nov.24 2021) en route to 1.1121 (2022 low January 28).

• Gold price outperforms as risk-aversion remains at full steam.
• Ukraine’s Pres. Zelenskyy’s comments triggers a fresh leg up in gold price.
• Western response awaited, as Russia goes into a war with Ukraine.

Amidst intense flight to safety, gold price keeps pushing higher, as it surpasses the critical $1,950 psychological barrier amid a renewed buying wave in the European session.

developing story ...

USD/KRW has staged a down move after hitting 1212 last month. In the view of analysts at Société Générale, the 1169/65 area should cushion the downside.

Next target on the upside located at 1217 and 1227

“A large downside is not envisaged; 200-DMA near 1169/1165 should be an important support.”

“Next objectives are at projections of 1217 and 1227.”

GBP/USD is falling for the third straight day. The pair has just broken below the 1.3455 support, which opens the door to additional losses towards the January low of 1.3358, economists at Société Générale report.

200-day moving average at 1.3678 is near-term resistance

“GBP/USD is dipping towards the daily Ichimoku cloud at 1.3455. If this gets violated, there would be a risk of further pullback towards January low of 1.3358.”

“The 200-DMA at 1.3678 is near-term resistance.”

See: GBP/USD to test YTD lows at 1.3358 as Ukraine conflict dampens BoE hike expectations – MUFG

“We will issue weapons to everyone who wants them,” Ukraine President Volodymyr Zelenskyy said in a national address on Thursday.

Additional comments

Meanwhile, Reuters reports that Reuters reports, “a boy killed after apartment building shelled in Kharkiv region in eastern Ukraine.”

“Adviser to Ukraine President Office says more than 40 Ukrainian soldiers dead and several dozen wounded,” Reuters said.

Related reads

USD/RUB rose to all-time high around 90.00 on war jitters

Live Russia-Ukraine war market updates, gold, currencies, oil wild swings

USD/RUB has given a breakout above the triangle within which it has evolved for the last five years. Economists at Société Générale note that the pair could reach the 101.00 level.

Holding 80.00/79.50 would mean persistence in the up move

“Defending the triangle upper limit at 80.00/79.50 would mean persistence in the up move. Next short-term projections are at 91.20 and 96.40.” 

“March 2020 high of 82.80 is first support.” 

“Target for the triangle breakout is located at 101.00.”

• A combination of factors dragged GBP/JPY to a fresh monthly low on Thursday.
• Russia-Ukraine war spooked investors and boosted demand for the safe-haven JPY.
• Reduced bets for a 50 bps BoE rate hike at the March meeting undermined the GBP.

The GBP/JPY cross remained depressed through the first half of the European session and was last seen trading just a few pips above the monthly low, around the 154.40 region.

The cross extended the previous day's sharp pullback from the weekly high, around the 156.75-156.80 region and witnessed heavy selling for the second successive day on Thursday. This also marked the fifth day of a negative move in the previous six and was sponsored by a combination of factors.

Russia's invasion of Ukraine triggered a fresh wave of the global risk-aversion trade and boosted the Japanese yen's safe-haven status. The anti-risk flow also benefitted the US dollar, which weighed on the British pound and further contributed to the heavily offered tone surrounding the GBP/JPY cross.

NATO confirmed that an official invasion of Ukraine has begun. Moreover, reports indicated that Russian forces attacked the Ukrainian border around Belarus and also fired missiles at several Ukrainian cities. The headlines weighed on investors' sentiment and led to a steep decline in the equity markets.

The geopolitical developments could dampen prospects for a 50 bps rate hike by the Bank of England at its March meeting. This was seen as another factor that undermined sterling and further exerted downward pressure on the GBP/JPY cross, though oversold RSI on hourly charts might help limit losses.

Technical levels to watch

Economist at UOB Group Lee Sue Ann assesses the latest RBNZ monetary policy meeting.

Key Takeaways

“The Reserve Bank of New Zealand (RBNZ) increased its Official Cash Rate (OCR) to 1.00%. It will also begin quantitative tightening in Jul, selling down its holdings of government bonds at a rate of NZD5 bn per year. Maturities will not be reinvested.”

“In our view, two things stood out at this meeting. First, the RBNZ had considered a 50bps hike. Second, new forecasts published by the RBNZ show the OCR rising to 2.50% over the next 12 months and peaking at about 3.25% at the end of 2023. In Nov, the bank forecast a lower peak of about 2.50%.”

“While these clearly show how serious the RBNZ is about containing inflation risks, we maintain our view for 25bps hike in May, Aug and Nov this year, taking the OCR to 1.25% by mid-2022, and for it to reach 1.75% by end-2022, taking into account several downside risks, including COVID-19 developments, the domestic housing market and external geopolitical environment. The next monetary policy meeting is on 23 Apr.”

GBP/USD has extended its slide as investors continue to seek refuge. Additional losses could be witnessed if the pair falls below 1.3340, FXStreet’s Eren Sengezer reports.

Pound to suffer losses if 1.3440 support fails

“Investors will stay focused on geopolitical developments and a prolonged military conflict is likely to continue to favour the dollar over the British pound.”

“On the downside, 1.3440 (static level) aligns as key support and the pair could push lower toward 1.3400 (psychological level) and 1.3370 (the starting point of the latest uptrend) if that support fails.”

“Resistances are located at 1.3500 (psychological level), 1.3530 (Fibonacci 38.2% retracement) and 1.3560 (100-period SMA, 200-period SMA).”

See: GBP/USD to test YTD lows at 1.3358 as Ukraine conflict dampens BoE hike expectations – MUFG

• USD/RUB clocked record tops around the 90.00 mark.
• Russian stocks retreat nearly 50%, the largest drop on record.
• The Russian central bank (CBR) will start FX intervention.

Following the Russian attack on Ukrainian soil, the ruble depreciated to all-time lows vs. the dollar and lifted USD/RUB to the 90.00 region on Thursday.

USD/RUB now looks to the CBR

The ruble remains well on the defensive following the recent geopolitical events, pushing USD/RUB to an all-time peak around the 90.00 mark on Thursday.

The start of the Russian invasion to Ukraine sparked a wave of selling pressure on Russian stocks, forcing the MOEX index to retreat nearly 50% after resuming operations.

In addition, the Bank of Russia announced it will start FX intervention in order to prevent a crisis in the domestic currency.

USD/RUB levels to watch

So far, the pair is up 5.09% at 85.62 and faces the next hurdle at 90.00 (all-time high Feb.23). On the downside, a breach of 80.41 (monthly high Jan.26) would aim for 76.01 (55-day SMA) and finally 74.25 (monthly low Feb.10).

According to Reuters, European Central Bank policymakers are gathering in Paris at lunchtime on Thursday for an "informal get-together", which seems to be a crisis meeting after Russia’s of Ukraine ramps up economic growth risks amid soaring inflation.

Key takeaways

This was aimed at preparing a decision on March 10 on the likely end of the ECB's bond-buying stimulus programme and pave the way for the first-rate hike in more than a decade to tackle surprisingly high inflation.

developing story ...

• GBP/USD dived to over a three-week low on Thursday amid a broad-based USD strength.
• Escalating geopolitical tensions spooked investors and boosted the safe-haven greenback.
• The set-up now seems tilted in favour of bearish and supports prospects for further losses.

The GBP/USD pair added to its intraday losses and dropped to over a three-week low, around the 1.3460 area during the first half of the European session.

Russia's invasion of Ukraine spooked investors and triggered a massive sell-off across the global equity markets, which, in turn, provided a strong boost to the safe-haven US dollar. This was seen as a key factor that exerted heavy downward pressure on the GBP/USD pair and dragged spot prices back below the key 1.3500 psychological mark.

Given the recent failure near a resistance marked by a downward sloping trend-line extending from July 2021 high, the subsequent downfall favours bearish traders. Sustained weakness below the 61.8% Fibonacci retracement level of the 1.3358-1.3644 move up will reaffirm the negative outlook and pave the way for a further depreciating move.

The GBP/USD pair could then accelerate the downward trajectory towards intermediate support near the 1.3435 region en-route the 1.3400 mark. The next relevant support is pegged near the 1.3360-1.3355 area, or 2022 low touched in January, which if broken decisively should pave the way for an extension of the ongoing decline.

On the flip side, attempted recovery moves might now confront resistance near the 1.3500 mark. This is followed by the 1.3515-1.3520 hurdle, above which the GBP/USD pair could climb to the 1.3575-1.3580 area. Some follow-through buying should allow bulls to challenge the aforementioned trend-line, currently around the 1.3635-1.3640 zone.

GBP/USD daily chart

Technical levels to watch

USD/CNH risks a deeper decline on a break below 6.3050, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “The sharp plunge in USD to 6.3080 came as a surprise (we were expecting sideway-trading). While the rapid drop appears to be overdone, USD could test the support at 6.3050 before the current weakness should stabilize. For today, the next support at 6.2970 is unlikely to come into the picture. On the upside, a break of 6.3260 (minor resistance is at 6.3220) would indicate the current weakness has stabilized.”

Next 1-3 weeks: “Yesterday (23 Feb, spot at 6.3230), we highlighted that while downward momentum has more or less dissipated, USD could edge lower but only a clear break of 6.3050 would indicate that it is ready to head lower in a sustained manner. However, we did not expect the subsequent sharp drop to 6.3080. Downward momentum is beginning to build again but USD has to close below 6.3050 before a sustained decline is likely. Looking ahead, the next support is at 6.2970. The chance for USD to close below 6.3050 would remain intact as long as 6.3330 is not breached within these few days.”

• DXY advances to new 3-week peaks around 96.80.
• Demand for safe havens drag US yields lower on Thursday.
• Another Q4 GDP estimate, Initial Claims, New Home Sales next on tap.

The greenback, in terms of the US Dollar Index (DXY), pushes higher and retests the 96.80 region for the first time since late January.

US Dollar Index remains bid on rising risk aversion

The index advances for the second session in a row on Thursday, this time supported by firm inflows into the safe haven universe after Russia attacked Ukraine in the early hours of Thursday.

The move higher in the buck comes amidst the retracement in US yields in response to the re-emergence of the buying interest for bonds.

In the NA session, another revision of the US Q4 GDP is due seconded by the weekly report on Initial Claims, the Chicago Fed National Activity Index and New Home Sales for the month of January.

What to look for around USD

The appetite for safer assets continues to bolster the dollar and keeps the index on the positive footing on the back of the deterioration of the geopolitical scenario. The constructive view in the buck remains underpinned by the current elevated inflation narrative and the probability of a more aggressive start of the Fed’s normalization of its monetary conditions. In the longer run, recent hawkish messages from the BoE and the ECB carry the potential to undermine the expected move higher in the dollar in the next months.

Key events in the US this week: Advanced Q4 GDP, Initial Claims, New Home Sales (Thursday) – PCE, Durable Goods Orders, Personal Income/Spending, Pending Home Sales, Final Consumer Sentiment (Friday).

Eminent issues on the back boiler: Escalating geopolitical effervescence vs. Russia and China. Fed’s rate path this year. US-China trade conflict under the Biden administration.

US Dollar Index relevant levels

Now, the index is gaining 0.46% at 96.64 and a break above 96.76 (monthly high Feb.23) would open the door to 97.44 (2022 high Jan.28) and finally 97.80 (high Jun.30 2020). On the flip side, the next down barrier emerges at 95.67 (weekly low Feb.16) seconded by 95.17 (weekly low Feb.10) and then 95.13 (weekly low Feb.4).

Markets have moved to price a real chance of a 50bps hike by the Bank of England (BoE) at their March meeting. However, economists at MUFG Bank expect investors to adjust expectations more in favour of smaller 0.25bps hike, which should drag GBP/USD down to year-to-date lows of 1.3358.

Ukraine conflict to dampen rate hike expectations

“The conflict is likely to encourage market participants to scale back expectations for monetary tightening from major central banks in the near-term. We would expect the UK and US rate markets to continue to adjust expectations more in favour of smaller 0.25 point hikes being delivered at their next meetings in March rather than 0.50 point hikes to reflect the heightened uncertainty.”

“The scaling back of more aggressive BoE rate hike expectations in the near-term combined with more risk-off trading conditions should see cable correct lower and test YTD lows at 1.3358 in the coming weeks.”

The Russia-Ukraine war won’t deter the European Central Bank (ECB) from faster wind-down of asset purchases at its next policy meeting, the central bank’s Governing Council member Gabriel Makhlouf said on Thursday.

Key quotes

“It’s too early to estimate the impact that the conflict will have on the economy.”

“It’s entirely possible that in March we can make decisions as to what happens to the asset purchase program,” he said. “I don’t personally feel that I could tell you what’s going to happen to interest rates, and when. I’d prefer to have a bit more options open to me as we go.”

Market reaction

EUR/USD is trading around 1.1250, struggling to extend the recovery from 1.1209 lows amid mounting Russia-Ukraine tensions.

• A strong pickup in the USD demand pushed USD/CAD to the highest level since January.
• Russia’s invasion of Ukraine spooked investors and boosted the safe-haven greenback.
• A sharp spike in oil prices failed to benefit the loonie or hinder the pair’s positive move.

The USD/CAD pair climbed to the highest level since January during the early part of the European session and is now looking to extend the momentum beyond the 1.2800 mark.

The pair regained strong positive traction on Thursday and built on the previous day's late rebound from the weekly low, around 1.2680 region amid resurgent US dollar demand. The worsening situation in Ukraine triggered a massive sell-off across the global equity markets and provided a strong boost to the safe-haven greenback. This, in turn, was seen as a key factor that pushed the USD/CAD pair through the 1.2780-85 region.

In fact, Russian President Vladimir Putin authorized a special military operation to protect Ukraine's Donbas region. Reports indicated that Russian forces attacked the Ukrainian border around Belarus and also fired missiles at several Ukrainian cities. US President Joe Biden called the attack unprovoked and unjustified. The developments spooked investors and drove flows towards traditional safe-haven assets, including the buck.

The strong intraday move up seemed rather unaffected by a sharp rally in crude oil prices, which tend to benefit the commodity-linked loonie. Worries that a war in Europe could disrupt global energy supplies pushed WTI crude oil prices to the highest since August 2014, though did little to inspire bearish traders. Moreover, a move beyond a four-week-old trading range hurdle supports prospects for additional gains.

That said, it will still be prudent to wait for some follow-through buying before confirming a near-term bullish breakout and positioning for any further appreciating move. Market participants now look forward to the US economic docket, highlighting the release of the Prelim GDP report and the usual Weekly Initial Jobless Claims data. The focus, however, will remain on developments surrounding the Russia-Ukraine saga.

Technical levels to watch

GBP/NZD has pulled up strongly from mid-November’s 1.8854 lows, piling up a robust 9% gain. The rally looks exhausted and is contained by a major Fibonacci marker at 2.0561, Benjamin Wong, Strategist at DBS Bank, report.

Pulling lower

“The RBNZ hiked 25 bps to bring the OCR to 1.00%; but in totality, it appears to be ahead of the BoE in coming to speed on policy normalisation as it scaled up its OCR projections path to peak at 3.4% in 2024 (currently OCR stands at 1.0%). RBNZ hawkishness undermines this cross.”

“Given the cross has rallied from December 2020’s 1.8524 lows, and the recent 2.0544 peak being a 14-month high, there remains scope for a probe towards the medium-term pivotal moving average at 1.9700.”

“A seemingly bearish head-and-shoulders top is testing both the Tenkan support peg of 2.0072 and 50-day moving average (DMA) at 2.0083. A pickup on the moving average convergence divergence (MACD) signal (about to turn negative) should grease a decline towards the 1.9663 cloud support. 200-DMA at 1.9689 would be resting within this price proximity too.”

“Fetching a 2.0544 high for most parts is contained and restrained by a meaningful 61.8% Fibonacci retracement at 2.0561.”

Russian President has ordered a full-scale invasion of Ukraine, and reports of explosions all the country are coming thick and fast. Markets have been convulsing, with the safe-haven US dollar and Japanese yen gaining ground alongside gold and oil – the latter is a major Russian export. Stocks and risk currencies are falling fast.

Here are live updates of the developments in Ukraine, market reactions, and quick analysis of the fast-moving events in Eastern Europe, which are having massive global effects.

Russia has launched an attack on Ukraine and triggered an intense flight to safety in financial markets. In FX, European currencies will remain under pressure and the dollar should continue to be favoured, in the opinion of economists at ING.

Dollar gets the flight to safety bid

“Given the uncertainty, those geographically closest to the crisis and exposed to the imported energy story – CE3 currencies in particular – to stay under pressure. The Swedish krona also looks exposed – a dovish central bank and a small open economy exposed to what will be lower European growth prospects.”

“While the Federal Reserve tightening cycle may be re-priced lower, we would still favour the dollar to outperform Europe right now. Trade and energy links to Russia are tiny compared to Europe. And dollar liquidity will be in demand at very uncertain times like this. We still like DXY (heavily weighted against European currencies) rising to 97.00.”

“In terms of spheres of influence, the Chinese renminbi remains strong and is establishing its credentials as a safe haven, reserve currency. Those commodity currencies that trade-off the renminbi – e.g. the South Africa rand and Brazilian real, plus those formally managed against the renminbi – e.g. the Singapore dollar – should continue to perform well.”

Euro has come under heavy selling pressure on risk aversion. The EUR/USD pair seems to have steadied around 1.1250 for the time being but it is likely to face renewed bearish pressure unless geopolitical tensions ease, FXSTreet’s Eren Sengezer reports.

Eyes on west's response to Russia

“In case Russia takes a step back and agrees to look for a diplomatic solution, a risk rally could sweep the markets and help the shared currency gather strength. In the short-term, however, this seems very unlikely as things currently stand.”

“With a drop below 1.1200, EUR/USD could extend its slide toward 1.1140, the starting point of the early-February uptrend.”

“On the upside, 1.1260 (Fibonacci 61.8% retracement) aligns as the first technical resistance before 1.1280 (static level, former support) and 1.1300 (psychological level, Fibonacci 50% retracement), 200-period SMA).”

See: EUR/USD could slump to the 1.1120 lows amid renewed tension in Ukraine – ING

The chair of the German Foreign Affairs Committee said Thursday, “new gas contracts with Russia are inconceivable.”

He added that “Germany can no longer imagine deepening economic relations with Russia.”

Earlier this week, Germany put a major natural-gas pipeline, Nord Stream 2, on hold after Russia’s troop deployed to two breakaway regions of Ukraine.

The Russia-Ukraine conflict has threatened to extend Europe’s energy crisis, with worst not yet over, as Brent oil hit $100 this morning.

AUD/SUD has hit Hit a five-week high despite equity rout and supposed flight to safety. Economists at Westpac see modest downside risk near-term but bargain-hunters should not expect 0.7000 to break.

Soaring commodity prices and miner dividend conversion help

“Public information on dividend conversion by Australian miners points to purchase of about A$13bn over Q1, mostly this week (A$10bn).”

“We can note the ongoing surge in energy prices, supporting Australia’s LNG exports. Related to this commodity price support is the fact that Australia is running large current account surpluses, in contrast to e.g. the GFC.”

“The RBA outlook has been overshadowed somewhat but yields did fall on the muted rise in Q4 wages. A cautious tone is likely on Tuesday.”

“AUD/USD ranges should ease slightly to say high 0.7000s to low 0.7200s.”

EUR/USD briefly traded down to 1.1200 before staging a rebound. As there is still much uncertainty surrounding the Russia-Ukraine conflict, the pair is at risk of falling to the 1.1120 lows, economists at ING report.

EUR/JPY to hold above 127.50

“EUR/USD has remained remarkably supported through the Russia-Ukraine crisis so far, but given the uncertainty, we would still say that risks are skewed to the 1.1200 area or even a retest of the 1.1120 lows.” 

"EUR/JPY has broken sharply lower – as equities take the strain – but unless we see another 10-15% equity correction, a break of good support at 127.50 is far from clear.”

European Union (EU) Foreign Policy Chief Josep Borrell said Thursday, the Union “will adopt the harshest package of sanctions ever implemented.

Meanwhile, French President Emmanuel Macron condemned Russia's military actions in Ukraine, tweeting out, “France strongly condemns the decision of Russia to start a war with Ukraine. Russia must immediately put an end to its military operations."

The broader market sentiment remains sour, reflective of the 2.50% slump in the S&P 500 futures while gold price consolidates the staggering rally below $1,950.

European Commission President Ursula von der Leyen said on Thursday that Europe is facing an unprecedented act of aggression by the Russian leadership against a sovereign, independent country, as reported by Reuters.

Key takeaways

"President Putin is responsible for bringing the war back to Europe."

"We will target strategic sectors of the Russian economy by blocking their access to key technologies and markets."

"We will weaken Russia's economic base and its capacity to modernise."

"We will freeze Russian assets in the EU and stop the access of Russian banks to the European financial market."

Market reaction

Safe-haven flows continue to dominate the financial markets on Thursday. US stocks futures indexes are down between 2.6% and 3.3%.

US Dollar Index (DXY) finally showcases its safe-haven qualities as geopolitical tensions around Ukraine surge. DXY can also bank on outsized interest rate support to provide a solid floor, economists at Westpac report.

Weakness into the low-95s a buying opportunity

“DXY finally showcasing its safe-haven qualities as geopolitical risks around Ukraine reach fever-pitch. The size and scale of military operations is a wide-open question, but it’s safe to assume markets will be headline-driven for some time yet.”

“DXY can also bank on outsized rate support to provide a solid floor to the currency. OIS Fed pricing by end-2022 continues to edge higher, to +164bp, though the probability of a 50bp March lift-off has slipped to about 20%.”

“Weakness into the low-95s a buying opportunity, for a bigger run beyond the recent 97.44 highs, as the Fed pulls away from the ECB with a more material monetary policy tightening in coming months.”

Events in Ukraine have sent EUR/CHF to a new low. Economists at ING expect the pair to sustain further losses towards 1.00 if the situation deteriorates further.

SNB may not step in aggressively until closer to 1.00

“Investors could speculate that Russian money will be heading to Switzerland and out of dollars ahead of likely more aggressive sanctions.”

“In terms of the Swiss National Bank's tolerance for franc strength, comments made in December suggest the SNB may not step in aggressively until closer to 1.00.” 

“Until Ukraine tension is resolved, expect EUR/CHF to stay offered and we cannot rule out a test of 1.00 if the situation deteriorates further.”

• AUD/USD came under intense selling pressure on Thursday and dived closer to the weekly low.
• The risk-off impulse benefitted the safe-haven USD and weighed on the perceived riskier aussie.
• The market focus will remain glued to fresh developments surrounding the Russia-Ukraine saga.

The AUD/USD pair maintained its heavily offered tone through the early European session and was last seen trading around the 0.7175 region, down nearly 0.80% for the day.

The pair witnessed aggressive selling on Thursday and extended the overnight pullback from the 0.7285 area, or the highest level since January 14 amid a fresh wave of the global risk-aversion trade. The markets took a turn for the worst after Russian President Vladimir Putin authorized a special military operation to protect Ukraine's Donbas region. This, in turn, provided a strong boost to the safe-haven US dollar and drove flows away from the perceived riskier aussie.

NATO confirmed an official invasion of Ukraine and reports indicated that Russian forces are attacking the Ukrainian border around Belarus. Moreover, Ukraine border guards said that an attack is also coming from Crimea. US President Joe Biden called the attack unprovoked and unjustified and announced to impose severe sanctions on Russia. This further fueled worries about a further escalation of tensions between Russia and the West, which continued weighing on the sentiment.

The continuous worsening of the situation in Ukraine dragged the AUD/USD pair back closer to the lower end of its weekly trading range. Some follow-through selling will be seen as a fresh trigger for bearish traders and set the stage for a further near-term depreciating move. Thursday's release of the Prelim US GDP report might do little to provide any meaningful impetus as the market focus remains glued to fresh developments surrounding the Russia-Ukraine saga.

Technical levels to watch

Further decline remains on the cards for USD/JPY in case 114.40 is cleared in the next weeks, commented FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘the rapid rebound appears to be running ahead of itself and USD is unlikely to strengthen much further’ and we expected USD to ‘trade within a range of 114.70/115.30’. USD subsequently traded within a narrower range than expected (114.90/115.19). The underlying tone has weakened somewhat and USD is likely to edge lower even though it is unlikely to challenge the major support at 114.40 (114.70 is already quite a strong level). Resistance is at 115.15 followed by 115.30.”

Next 1-3 weeks: “Our narrative from two days ago (22 Feb, spot at 114.75) still stands. As highlighted, downward momentum has improved slightly and there is room for USD to edge lower but it has to break 114.40 before a more sustained decline can be expected. Only a breach of 115.30 (no change in ‘strong resistance’ level) would indicate the current mild downward pressure has eased.”

Geopolitical tensions weigh on the euro, even though more persistent inflation pressures are shifting European Central Bank (ECB) rhetoric. In the view of economists at Westpac, EUR/USD risks testing range support at 1.11.

Events in Ukraine continue to dominate markets in Europe

“The counter impact of the geopolitical tension on rates is that the imposing of sanctions and restrictions on use of Russian gas and resources is likely to sustain the recent rise in inflation pressures.”

“This week has seen further evidence of widening views within ECB. Austria’s Holzman said the extent of inflation pressures could trigger two rates cuts into end-2022 while France’s Villeroy continued to point to the ECB’s policy optionality and gradualism. Prospects for a more marked change in policy may be clouded by events in Ukraine, but are still going to be critical for the direction of EUR into mid-2022.”

“Russia’s attack today produced a clear break of 1.1300, likely lowering EUR range from 1.13-1.16 to 1.11-1.14 ahead of the 10th March ECB meeting.”

Investors scaled back their open interest positions in natural gas futures markets by around 2.8K contracts on Wednesday, reversing the previous daily build, considering advanced readings from CME Group. Volume followed suit and went up by around 55.2K contracts.

Natural gas faces the next hurdle at $5.00

Prices of natural gas extended the corrective upside on Wednesday, although the uptick was accompanied by shrinking open interest and volume, trimming prospects for the continuation of the uptrend in the very near term. Against this, the next resistance of note for the commodity comes at the $5.00 mark per MMBtu.

In opinion of FX Strategists at UOB Group, NZD/USD could have charted a near-term top following the recent price action.

Key Quotes

24-hour view: “While we expected NZD to advance yesterday, we were of the view that ‘a sustained rise above 0.6775 is unlikely’. We did not anticipate the strong surge in NZD to 0.6809 and the subsequent sharp pullback from the high. The pullback amid deeply overbought conditions could extend to 0.6735. The strong support at 0.6715 is unlikely to come under threat. Resistance is at 0.6785 followed by 0.6800.”

Next 1-3 weeks: “We have expected a stronger NZD since last Thursday (17 Feb, spot at 0.6690). In our latest narrative from yesterday (23 Feb, spot at 0.6750), we highlighted that NZD could advance further to 0.6775, possibly 0.6795. While our view for a stronger NZD was not wrong, we did not expect the manner by which NZD surged to 0.6809 and the subsequent sharp pullback. The pullback amid overbought conditions has increased the risk of a short-term top. From here, a breach of 0.6715 (‘strong support’ level was at 0.6700 yesterday) would indicate that 0.6809 is likely a short-term top.”

Open interest in crude oil futures markets rose by around 2.4K contracts on Wednesday after seven consecutive daily pullbacks according to preliminary figures from CME Group. On the other hand, volume retreated sharply by around 620K contracts, the largest daily drop since June 14 2021.

WTI: Green light for a move to $100.00/bbl

Wednesday’s small uptick in prices of the barrel of WTI was in tandem with rising open interest and volume, opening the door to further gains in the very near term and with the immediate target at the psychological $100.00 mark, an area last visited in July 2014.

• USD/JPY came under intense selling pressure in reaction to escalating geopolitical tensions.
• Russia’s invasion of Ukraine boosted the safe-haven JPY and exerted downward pressure.
• A slump in the US bond yields further inspired bearish traders and added to the selling bias.

The USD/JPY pair continued losing ground through the early European session and dropped to a fresh three-week low, around the 114.40 region in the last hour.

The pair witnessed aggressive selling during the early part of the trading on Thursday and broke down of its overnight consolidation phase amid the worsening situation in Ukraine. Russian President Vladimir Putin authorized a special military operation in Donbas, while NATO confirmed an official invasion of Ukraine. This triggered a massive sell-off across the global equity markets, which boosted demand for the safe-haven Japanese yen and exerted heavy downward pressure on the USD/JPY pair.

In the latest developments, reports indicated that Russian forces are attacking the Ukrainian border around Belarus. Moreover, Ukraine border guards said that an attack is also coming from Crimea. US President Joe Biden called the attack unprovoked and unjustified and added that the US and its allies will impose severe sanctions on Russia.  This fueled worries about a further escalation in tensions between Russia and the West, which kept investors on the edge and underpinned the safe-haven JPY.

Bearish traders further took cues from a steep decline in the US Treasury bond yields, though a strong pickup in the US dollar demand might help limit losses for the USD/JPY pair, at least for now. The Russia-Ukraine saga seemed to have dashed hopes for a more aggressive policy response by the Fed to combat stubbornly high inflation. This, along with the global flight to safety, dragged the US bond yields lower and further contributed to the heavily offered tone surrounding the USD/JPY pair.

With the latest leg down, spot prices have moved well within the striking distance of the 100-day SMA support, currently around the 114.30 region. This is closely followed by the monthly swing low, around the 114.15 zone and the 114.00 mark. A convincing break below the latter will set the stage for a further near-term depreciating move for the USD/JPY pair. Traders now look forward to the Advance US GDP print for some impetus, though the key focus will remain on geopolitical developments.

Technical levels to watch

• USD/CHF remains pressured around key support line, down for the second consecutive day.
• Bearish MACD signal, descending RSI line favor sellers.
• 61.8% Fibonacci retracement guards immediate upside, monthly resistance line is the key.
• Safe-haven appeals of USD and CHF both trouble pair traders amid geopolitical fears emanating from Russia, Ukraine.

USD/CHF stays on the back foot around 0.9180 while printing the least daily moves among the Group of 10 (G10) currency pairs during early Thursday morning in Europe.

The reason could be linked to the traders’ indecision due to the risk-safe status of the US dollar and Swiss Franc (CHF) both. That said, Russia’s invasion of Ukraine recently bolstered the market’s risk-off mood.

Read: Forex Today: Flight to safety intensifies as Russia unleashes attack on Ukraine

Technically, the USD/CHF pair’s sustained trading below the 61.8% Fibonacci retracement (Fibo.) November 2021 upside joins the bearish MACD signals and downbeat RSI, not oversold, to keep sellers hopeful.

However, an upward sloping trend line from January 13, around 0.9168 at the latest, restricts the quote’s immediate declines.

Following that, 0.9140 and the 0.9100 threshold may test the pair bears before directing them to the late 2021 low near 0.9088.

Alternatively, an upside clearance of the 61.8% Fibo. level of 0.9196 will need validation from the 0.9200 round figure to direct USD/CHF buyers towards the weekly top near 0.9230.

Though, a descending resistance line from January 31 will challenge the pair bulls afterward, around 0.9240 at the latest.

USD/CHF: Daily chart

Trend: Bearish

Gold price rockets to $1,950 after Russia officially invades Ukraine. What’s next? XAU/USD bulls to defy overbought conditions as $2,000 remains in sight, FXStreet’s Dhwani Mehta reports.

Bulls take a breather after the relentless rise

“Markets keep a close eye on the further developments around the Russia-Ukraine conflict. Moreover, US President Joe Biden’s promise for ‘further consequence on Russia’ and the Western response will be closely followed for fresh trading opportunities in gold.”

“Relative Strength Index (RSI) marches higher above 70.00. The pace of the rally suggests that a minor correction could be in the offing.”

“If the corrective downside picks up pace, then XAU/USD could look to test the triangle resistance now support at $1,907. Ahead of that level, the $1,930 and $1,920 round numbers will help limit the pullback.”

“Buying resurgence could see a retest of the 13-month highs of $1,949, above which doors will open up towards the $2,000 level.”

See – Gold Price Forecast: XAU/USD to soar towards $2,075 on a break above $1,917/23 – Credit Suisse

GBP/USD is now expected to navigate within the 1.3500-1.3645 range in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that the ‘outlook is mixed’ and we expected GBP to ‘trade within a relatively broad range of 1.3560/1.3625’. GBP subsequently rose to 1.3620 before plunging to a low of 1.3437 during late NY session. The swift and sharp drop in GBP has room to extend but any weakness is expected to encounter solid support at 1.3500. Resistance is at 1.3565 but only a breach of 1.3580 would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “Our update from yesterday (23 Feb, spot at 1.3595) still stands. As highlighted, GBP is likely to trade sideways for now, expected to be between 1.3500 and 1.3645. Looking ahead, the downside appears to be more at risk but GBP has to break clearly below the solid support at 1.3500 before a sustained decline is likely (next support is at 1.3455).”

• Gold bulls take a breather around 13-month top, prints biggest daily gains in a month.
• Russia attacks Ukraine borders, recently from Belarus, causalities reported.
• US, EU vows to take harsh actions over Moscow’s military moves.
• DXY, oil also rallied on the geopolitical tensions, US Q4 GDP, geopolitics eyed.

Gold (XAU/USD) buyers cheer Russia-linked full-steam risk-off around $1,940, up 1.65% intraday heading into Thursday’s European session. In doing so, the yellow metal stays firmer around a 13-month high marked before a few minutes as the markets rush to risk-safety on Russia’s invasion of Ukraine.

ABC News recently quoted Ukraine's border services while mentioning that Russian and Belarusian troops are now attacking the northern border from Belarus. There are reports of casualties.

Early Thursday, Russian President Vladimir Putin formally announced the beginning of military operations in Ukraine, rejecting the Western sanctions.

Following that, President Joe Biden showed readiness to impose severe sanctions on Russia while European Commission President Ursula von der Leyen vows to hold Moscow ‘accountable’. The Group of Seven (G7) leaders are going to meet later in the day and may discuss more sanctions as the West firmly supports Ukraine.

Risk appetite sours amid the geopolitical fears and drowns the US 10-year Treasury yields and the stock futures. It should be observed that the US Dollar Index (DXY) rises 0.40% intraday to print the biggest daily jump in a month.

To sum up, gold’s traditional safe-haven appeal can keep directing gold towards further north until the conditions settle. However, recently hawkish Fedspeak may offer a pause to the XAU/USD bulls. Also important to watch is the second reading of the US Q4 GDP, expected 7.0% annualized versus 6.9% prior.

Read: Gold Price Forecast: XAU/USD hits $1,950 on Russia-Ukraine war, what’s next?

Technical analysis

A clear upside break of a 17-month-old descending trend line joins a sustained run-up beyond June 2021 peak to keep gold buyers hopeful of poking January 2021high near $1,960.

However, the overbought RSI conditions may restrict the metal’s up-moves beyond $1,960, if not then highs marked in November and September 2020, respectively around $1,965 and $1,973, will challenge the gold buyers.

If at all the risk-aversion propels XAU/USD beyond $1,973, the odds of its run-up towards the $2,000 psychological manget can’t be ruled out.

Alternatively, pullback moves may initially test June’s high of $1,917, a break of which will direct the quote towards the multi-month-old previous resistance line near $1,909.

Also acting as short-term support is the $1,900 threshold and $1,890 level comprising the 10-DMA and an ascending support line from early February.

Gold: Daily chart

Trend: Further upside expected

CME Group’s flash data for gold futures markets noted open interest rose for the fifth consecutive session on Wednesday, this time by nearly 6.5K contracts. Volume, instead, extended the choppy activity and shrank by around 190.2K contracts.

Gold:  A visit to $2,000 in the offing?

Gold resumed the upside on Wednesday amidst rising open interest, indicative of rising bets for the continuation of the uptrend in the very near term at least. Further gains in bullion could now target the $2,000 mark per ounce troy in the longer run.

• GBP/USD dropped to a near four-week low amid a strong pickup in demand for the safe-haven USD.
• Russia’s invasion of Ukraine spooked investors and triggered a massive sell-off in the equity markets.
• Tumbling US bond yields capped the USD and helped limit losses for the pair amid BoE rate hike bets.

The GBP/USD pair maintained its offered tone heading into the European session, albeit has managed to rebound a few pips from a more than three-week low touched earlier this Thursday. The pair was last seen trading just above the 1.3500 psychological mark, down nearly 0.30% for the day.

Following the previous day's turnaround from the 1.3620 area, the GBP/USD pair witnessed selling during the early part of the trading on Thursday a strong pickup in demand for the US dollar. Russia's invasion of Ukraine triggered a fresh wave of the global risk-aversion trade, which was evident from a sell-off in the equity markets. This, in turn, boosted the greenback's relative safe-haven status and exerted downward pressure on the major.

NATO also confirmed that an official invasion of Ukraine has begun and correspondents reported that Russian forces have entered Ukraine from Crimea. Moreover, reports indicated that Russian forces are attacking the Ukrainian border around Belarus. Adding to this, Ukraine border guards said that an attack is also coming from Crimea. This kept investors' on the edge and continued underpinning traditional safe-haven assets, including the greenback.

That said, a slump in the US Treasury bond yields held back the USD bulls from placing aggressive bets. The recent geopolitical developments might have forced investors to scale back expectations for a more aggressive policy stance by the Fed to combat high inflation. This, along with the global flight to safety led to a steep decline in the US bond yields and kept a lid on the further gains for the buck, at least for the time being.

Apart from this, rising bets for additional interest rate hikes by the Bank of England acted as a tailwind for the British pound. This was seen as another factor that helped limit the downside for the GBP/USD pair. That said, any meaningful recovery still seems elusive as the market focus will remain on the situation in Ukraine. The Russia-Ukraine saga will drive demand for the safe-haven USD and continue to infuse volatility around the GBP/USD pair.

Technical levels to watch

Here is what you need to know on Thursday, February 24:

Russia has launched an attack on Ukraine during the Asian trading hours and triggered an intense flight to safety in financial markets. Traditional safe-haven assets, such as gold, the JPY and the CHF, continue to gather strength early Thursday and the US Dollar Index trades at its highest level in nearly a month above 96.50. Later in the day, the US Bureau of Economic Analysis will release its second estimate of the fourth-quarter GDP data. The weekly Initial Jobless Claims and January New Home Sales will be featured in the US economic docket as well. Investors, however, will remain focused on headlines surrounding the Russia-Ukraine conflict.

Following reports of Russia carrying out missile strikes on Ukraine's infrastructure and border guards, Ukrainian President Volodymyr Zelenskyy announced a country-wide martial law. The latest developments suggest that the Russian military is moving towards the Ukrainian border from Belarus. Furthermore, Russia is reportedly unleashing cyberattacks and Ukraine is said to have shot down several Russian planes and a helicopter.

Reflecting the risk-averse market environment, the 10-year US Treasury bond yield is down 5% and US stocks futures indexes are losing between 2% and 2.3%. Crude oil prices are surging higher and the barrel of West Texas Intermediate (WTI) was last seen trading at its highest level since August 2014 above $96.

Trading in the Moscow Exchange has been suspended and the Russian rouble on the interbank market fell to a new record low against the dollar. USD/RUB was last seen rising more than 7% on the day at 87.40. 

Gold surged higher on Thursday and reached its strongest level since early January near $1,950. XAU/USD is up more than 1.5% in the early European session, trading around $1,940. 

EUR/USD slumped to its weakest level in more than three weeks near 1.1200 before staging a rebound. The pair is moving near mid-1.1200s and down 0.5% on a daily basis.

EUR/JPY is down 1% at 128.80, AUD/JPY is losing 0.9% at 82.40, EUR/CHF, which touched its lowest level since 2015 at 1.02911 earlier in the session, seems to have steadied above 1.0300 for the time being.

GBP/USD is falling for the third straight day and tests 1.3500. There won't be any macroeconomic data releases from the UK.

Despite the broad-based dollar strength, the USD/JPY is trading in the negative territory near 114.50, pressured by the sharp drop witnessed in US T-bond yields.

Bitcoin is trading at its lowest level in a month near $35,000 and losing more than 6% on the day. Ethereum is already down nearly 10% on Thursday and continues to edge lower after breaking below $2,500.

FX Strategists at UOB Group noted that further downside in EUR/USD is likely while below 1.1360 for the time being.

Key Quotes

24-hour view: “We expected EUR to ‘consolidate and trade between 1.1290 and 1.1360’ yesterday. EUR subsequently rose to 1.1358, dropped to 1.1299 before dropping below 1.1280 during early Asian hours. Downward momentum has improved and EUR could weaken further. That said, the next major support at 1.1240 is unlikely to come into the picture (there is a minor support at 1.1260). On the upside, a breach of 1.1330 (minor resistance is at 1.1315) would indicate that the downside risk has dissipated.”

Next 1-3 weeks: “Yesterday (23 Feb, spot at 1.1325), we highlighted that while downward momentum has waned somewhat, there is still chance for EUR to drop to 1.1280. Our view was not wrong as EUR dipped below 1.1280 during early Asian hours. Downward momentum has improved and the chance for the weakness in EUR to extend to the next major support at 1.1240 has increased. Only a break of 1.1360 (‘strong resistance’ level was at 1.1375yesterday) would indicate that the downside risk that started more than a week ago has dissipated.”

• The risk-off impulse boosted the safe-haven JPY and prompted aggressive selling around EUR/JPY.
• Russia’s invasion of Ukraine weighed on investors’ sentiment and triggered a sell-off in equities.
• The overnight hawkish remarks by the ECB officials failed to lend support to the euro or the cross.

The EUR/JPY cross recovered a few pips from the daily low and was last seen trading just below the 129.00 round-figure mark, still down around 0.85% for the day.

Russian President Vladimir Putin authorized a special military operation in Donbas and triggered a fresh wave of the global risk-aversion trade. This was evident from a sea of red in the equity markets, which, in turn, forced investors to take refuge in the safe-haven Japanese yen and prompted aggressive selling around the EUR/JPY cross.

NATO also confirmed that an official invasion of Ukraine has begun and correspondents reported that Russian forces have entered Ukraine from Crimea. The already weaker sentiment was further hit by news that Russian forces are attacking the Ukrainian border around Belarus, fueling fears about a further escalation of tensions in Eastern Europe.

German Chancellor Olaf Scholz said that the attack on Ukraine is a blatant breach of international law and that Russia must immediately cease its military action. US President Joe Biden also issued a statement and called the attack unprovoked and unjustified. Biden further added that the US and its allies will impose severe sanctions on Russia.  

The geopolitical developments dragged the EUR/JPY cross to a near four-week low and largely overshadowed the overnight hawkish comments by the European Central Bank (ECB) officials. The ECB Vice President Luis de Guindos said that we will readjust asset purchases if needed and will see when an interest rate hike can take place.

Adding to this, Governing Council member Bostjan Vasle said that the time seems right for the monetary policy to move out of crisis mode and start the process of gradual normalisation. This, however, did little to lend any support to the shared currency or ease the intraday bearish pressure surrounding the EUR/JPY cross.

Hence, the market focus remains on fresh headlines on the situation in Ukraine, which will continue to play a key role in influencing the broader market risk sentiment. This, in turn, will drive demand for traditional safe-haven assets, including the JPY, and produce some meaningful trading opportunities around the EUR/JPY cross.

Technical levels to watch

"The European Central Bank should continue its bond-buying stimulus programme at least until the end of the year and keep it open-ended to cushion the fallout from any conflict in Ukraine," ECB policymaker Yannis Stournaras told Reuters during early Thursday morning in Europe.

Key quotes

EUR/USD stays depressed

Following the news, EUR/USD prices remain pressured around the monthly low, last seen near 1.1248.

Read: EUR/USD slumps to monthly low near 1.1200 as Russia-Ukraine war begins

• USD/INR prints the biggest daily gains in a fortnight, renews weekly high.
• Ukraine pushes global leaders for action against Russian invasion.
• Bullish Doji, sustained bounce off 200-DMA keep buyers hopeful.

USD/INR takes the bids to refresh one-week high around 75.25, posting the biggest daily fall since June 2021 during early Thursday morning in Asia.

In doing so, the Indian rupee (INR) pair justifies the previous day’s Doji candlestick, as well as Monday’s bounce off 200-DMA and 23.6% Fibonacci retracement (Fibo.) of December-January fall.

Adding to the bullish bias is the pair’s latest upside break of the previous support line from January 12.

Above all, the US dollar’s rally on the back of the risk-aversion wave, triggered due to Russia’s military invasion of Ukraine, favors USD/INR buyers.

That said, the 61.8% Fibo. level of 75.50 becomes an imminent target for the USD/INR bulls ahead of the monthly peak surrounding 75.70.

On the contrary, a convergence of the 200-DMA and 23.6% Fibonacci retracement level near 74.40 becomes crucial support.

It’s worth noting that a daily closing below the previous support line near 75.12 may trigger consolidation of the recent gains.

USD/INR: Daily chart

Trend: Further upside expected

• Bears are hopeful near 154.50 for further weakness.
• The RSI (14) range shift to 20.00-40.00 adds to the downside filters.
• Bulls can show up only if the cross gets settled above 200-EMA

The GBP/JPY pair has witnessed a steep fall in the Asian session after the cross violated the trendline placed from February 07 lows at 155.13.

Earlier, GBP/JPY remained in the grip of bears after a double top formation near the January 05 high of 157.77 and February 10 high of 158.06. After sensing significant offers near 158.06, the asset oscillated in a range of 155.30-157.29, which are February 14 low and Friday’s high respectively.

On a four-hour scale, GBP/JPY has ripped off the trendline placed from 155.13 near Tuesday’s low of 155.51. The Relative Strength Index (RSI) (14) has shifted its trading range from 60.00-40.00 to 40.00-20.00. The 50-period Exponential Moving Average (EMA) has tilted lower near 156.25 while the 200-period EMA is flat around 155.68.

Bears are now eyeing Thursday’s low at 154.46, as a violation of the same will push the spot towards the January 28 low at 154.09, followed by January 25 low at 153.13.

On the flip side, bulls can show up if the cross oversteps 200-period EMA at 155.68 decisively towards Wednesday’s high at 156.77 and Friday’s high at 157.29.

GBP/JPY four-hour chart

As the world grapples with the geopolitical play between Russia and Ukraine during the early Thursday morning in Europe, Iran’s Chief Negotiator raised doubt over the US-Iran nuclear deal.

The diplomat said, “Being near the finish line is no guarantee to seal nuclear deal.”

It’s worth noting that Western policymakers have been optimistic over the nearness to a deal that targets Tehran’s denuclearization.

Read: EU’s Von der Leyen vows to hold Moscow “accountable” – AFP

Oil prices get another boost

Following the news, WTI crude oil prices remain firmer around $96.50, up 4.85% intraday by the press time.

Also read: WTI Price Analysis: Renews eight-year high on Russia-Ukraine conflict

Following US President Joe Biden’s readiness to impose severe sanctions over Russia, due to Moscow’s military attack on Ukraine, European Commission President Ursula von der Leyen also crossed wires via AFP.

The news said that the EU Chief denounces Russia's attack on Ukraine and vows to hold Moscow ‘accountable’.

"In these dark hours, our thoughts are with Ukraine and the innocent women, men and children as they face this unprovoked attack and fear for their lives," adds AFP.

Also read: US President Biden: United States and our allies and partners will be imposing severe sanctions on Russia

Elsewhere, reports of Russian forces attacking Ukrainian border around Belarus offer the latest blow to the market's sentiment.

Market reaction

Risk-off mood gains momentum following the news. To portray the same, the US 10-year Treasury yields snap two-day rebound by declining around 10 basis points (bps) to 1.88% whereas S&P 500 Futures drop near 2.0% by the press time. It should be observed that the US Dollar Index (DXY) rises 0.40% intraday due to its safe-haven appeal at the latest.

Read: EUR/USD slumps to monthly low near 1.1200 as Russia-Ukraine war begins

• NZD/USD witnessed aggressive selling during the Asian session amid a fresh wave of risk-off trade.
• Russia’s invasion of Ukraine took its toll on the risk sentiment and benefitted the safe-haven USD.
• The bearish pressure, however, abated near the 0.6700 mark, warranting some caution for bears.

The NZD/USD pair quickly recovered a few pips from the Asian session low and was last seen trading around the 0.6730-0.6735 region, still down nearly 0.60% for the day.

The pair witnessed aggressive selling during the early part of the trading on Thursday and extended the overnight pullback from over one-month high, touched in reaction to a more hawkish RBNZ outlook. The worsening situation in Ukraine triggered a massive sell-off across the global equity markets, which boosted the safe-haven US dollar and weighed heavily on the perceived riskier kiwi.

In the latest development, Russian President Vladimir Putin authorized a special military operation in Donbas. NATO also confirmed that an official invasion of Ukraine has begun. US President Joe Biden issued a statement shortly after the news and called the attack unprovoked and unjustified. Biden also mentioned that the US and its allies will respond in a united and decisive way.

Adding to this, German Chancellor Olaf Scholz said that the attack on Ukraine is a blatant breach of international law and that Russia must immediately cease its military action. The European Commission President Von der Leyen also condemned Russia's move. This followed Putin's warning of retaliation in case of any foreign interference and fueled fears about a further escalation of tensions.

The NZD/USD pair, however, managed to find decent support near the 0.6700 mark, which should now act as a pivotal point for short-term traders. That said, any meaningful upside seems elusive as geopolitical tensions would keep investors on edge and benefit the safe-haven buck. That said, bears are likely to wait for sustained break below the aforementioned handle before placing fresh bets.

Technical levels to watch

Having initially promised “further consequences” for Russia, due to Moscow’s military attack on Ukraine, US President Joe Biden tweeted, “Tomorrow, I will be meeting with the Leaders of the G7, and the United States and our Allies and partners will be imposing severe sanctions on Russia.”

More tweets

We will continue to provide support and assistance to Ukraine and the Ukrainian people.

President Zelenskyy reached out to me tonight and we just finished speaking. I condemned this unprovoked and unjustified attack by Russian military forces. I briefed him on the steps we are taking to rally international condemnation, including tonight at the UN Security Council.

He asked me to call on the leaders of the world to speak out clearly against President Putin’s flagrant aggression, and to stand with the people of Ukraine.

Elsewhere, reports over Russia’s temporary suspension to multiple flights until the early hours of March 02 could also be heard.

Read: Ukraine’s Foreign Minister: “The world must act immediately. Future of Europe & the world is at stake”

Market reaction

The rush to risk-safety escalates on the news.

While portraying the risk-off mood, the US 10-year Treasury yields snap two-day rebound by declining around nine basis points (bps) to 1.88% whereas S&P 500 Futures drop over 2.0% by the press time. It should be observed that the US Dollar Index (DXY) rises 0.40% intraday due to its safe-haven appeal at the latest.

Also read: EUR/USD slumps to monthly low near 1.1200 as Russia-Ukraine war begins

Ukraine’s Foreign Minister Dmytro Kuleba tweeted, urging immediate support from across the world.

His tweet read: “The world must act immediately. Future of Europe & the world is at stake.

To do list:

1. Devastating sanctions on Russia NOW, including SWIFT

2. Fully isolate Russia by all means, in all formats

3. Weapons, equipment for Ukraine

4. Financial assistance

5. Humanitarian assistance.”

This comes as CNN News shares an image from the Ukrainian President’s office following the loud explosions the team heard on the ground in Kiev.

• USD/CHF is volatile surrounding the Ukraine crisis and warfare imposed by Russian forces. 
• European markets are coming online to face the volatility. 

USD/CHF is turning up and is trading 0.16% higher a Russian President Vladimir Putin said he had authorised military action in Ukraine's breakaway region of Donbas. There were soon after confirmations from NATO that an attack on Ukraine had begun and subsequent breaking news of military strikes have flowed throughout the Asian trading session. 

At the time of writing, USD/CHF is trading at 0.9190 as the US dollar surges, attracting a safe-haven bid as risk-fx tumbles. In on the latest updates, the Russian Defense Ministry said in a statement that the country is attacking Ukraine’s military infrastructure with high-precision weapons. 

In response, the White House made a statement by President Joe Biden on Russia's unprovoked and unjustified attack on Ukraine and he will address the US nations later today. 

“I will be monitoring the situation from the White House this evening and will continue to get regular updates from my national security team. Tomorrow, I will meet with my G7 counterparts in the morning and then speak to the American people to announce the further consequences the United States and our Allies and partners will impose on Russia for this needless act of aggression against Ukraine and global peace and security.”

• USD/RUB crosses the previous record high marked in January 2016 amid broad rally in safe-havens.
• Ukraine imposed martial law as Russia begins the much-feared war.
• Hawkish Fedspeak also underpins the DXY’s biggest daily gains in a month.
• Geopolitical headlines are crucial for further direction, US Q4 GDP will decorate calendar.

USD/RUB rallies to the record top of 86.81 as Russia invades Ukraine, propelling the market’s rush to risk-safety during early Thursday morning in Europe.

The Russian ruble (RUB) pair also justifies the market’s increasing expectations of a faster Fed-rate-hike trajectory.

Ukraine President Volodymyr Oleksandrovych Zelenskyy recently confirmed, “Russia carried out missile strikes on our infrastructure and on our border guards.” In doing so, the national leader also imposes martial law in Ukraine while advising to stay at home as much as possible.

On the other hand, IFAX came out with the news saying, “Russian-backed rebels say start attack on Ukraine-controlled town near Luhansk.”

Earlier in the day, US President Joe Biden promised “further consequences” for Russia while US Senator Marco Rubio, also the Vice-Chairman of the Select Committee on Intelligence, said that Russian airborne attempts seizing control on Kyiv airport.

While portraying the risk-off mood, the US 10-year Treasury yields snap two-day rebound by declining around nine basis points (bps) to 1.88% whereas S&P 500 Futures drop over 2.0% by the press time. It should be observed that the US Dollar Index (DXY) rises 0.40% intraday due to its safe-haven appeal at the latest.

Considering the US dollar’s traditional safe-haven status, USD/RUB is likely to witness further upside until the war is over. Also adding to the upside momentum are the recent hawkish comments from San Fransisco Fed President Mary Daly. That said, the second reading of the US Q4 GDP, expected 7.0% annualized versus 6.9% prior, will decorate the calendar.

Technical analysis

Although an extended war is likely to propel the quote towards 90.00, pullback moves may aim for the previous all-time high of 85.98, marked in January 2016, before aiming March 2020 top surrounding 82.85.

• S&P 500 futures plunge near 4,120 on headlines of explosions in eastern Ukraine.
• The risk-off impulse has set the safe-haven assets on fire, dumping high-beta assets. 
• US President Joe Biden has seldom pinned Russia responsible for death and destruction in Ukraine.

The risk appetite of investors has squeezed principally in the Asian session after the expectation of an imminent war situation between Russia and Ukraine confirmed by NATO. A build of 2000k Russian troops in the Donbas region of eastern Ukraine has put Ukraine under attack. The S&P 500 futures, Asian markets, antipodeans, and other risk-sensitive assets have taken a bullet after the headlines on the Russia-Ukraine war get flooded with explosions, military troops, and nervous statements from the world leaders.

While bullions and US Dollar index (DXY) are shining higher on the risk-aversion theme and crude oil prices is gaining momentum on expectations of a serious cut in total global oil supplies.

S&P 500 futures skid near 4,120 on the headlines of explosions, which have begun sounding in the distance in Kyiv. The prayers from the entire world to support Ukraine against an unjustified attack by Russia are indicating massive havoc in the market.

Earlier, the US Secretary of State Antony John Blinken said that he believes that Russia will invade Ukraine before the night is over.

The statement is out from the White House by US President Joe Biden that Russia will be held accountable for the losses of human life and Western leaders will retaliate in unity. Adding to that, US President Joe Biden has stated ‘loud and clear that the US will come with harsh sanctions on Russia in response to its aggression over Ukraine, after discussing with the G7 counterparts.

The bloodbath in the S&P500 futures has not been completed yet. Any further negative development over the Russia-Ukraine war may keep hammering the US 500-basket futures.

As Russia goes to war, Ukraine’s President Volodymyr Zelenskyy announces the imposition of martial law, which will cover the entire country.

Zelenskyy noted: “Russia carried out missile strikes on our infrastructure and on our border guards.”

This comes after Ukrainian President Zelensky and his American counterpart Joe Biden spoke on the phone, earlier on.

Silver rises for the seventh consecutive day, firmer around the highest levels since January 18.

A successful break of 200-DMA, descending trend line from July 2021 adds strength to the bullish bias.

Silver (XAG/USD) refreshes three-month high, up 1.40% intraday around $95.00 as Russian military attacks Ukraine during early Thursday morning in Europe.

The bright metal tracks gold prices to print a seven-day uptrend amid bullish MACD signals.

Also favoring XAG/USD buyers is the sustained break of the 200-DMA and a downward sloping resistance from July 2021, now support.

However, the 50% Fibonacci retracement (Fibo.) of May-September 2021 declines, near $25.10, challenges intraday silver buyers.

Also acting as an upside hurdle is November 2021 high near $25.40, followed by the 61.8% Fibo. level surrounding $26.00.

Alternatively, pullback moves may have to conquer the previous resistance confluence including the multi-day-old descending trend line and the 200-DMA, around $24.30, to reject the latest bullish signals.

Even so, a two-week-long support line of $24.00 will act as an extra filter to the south.

Silver: Daily chart

Trend: Further upside expected

Russian Defense Ministry said in a statement on Thursday, the country is attacking Ukraine’s military infrastructure with high-precision weapons, per RIA.

Meanwhile, US Senator Marco Rubio, Vice Chairman of the Select Committee on Intelligence, tweeted again, “#Russia isn’t just focused on seizing eastern #Ukraine Russian military forces are working towards isolating #Kyiv at this very moment.”

• Gold Price Forecast: XAU/USD surges to $1,949.09 on Russian military attack on Ukraine

China envoy to UN said Thursday, “situation in Ukraine at a 'critical' moment,” adding that “China is 'highly concerned.”

“China believes that the door to a peaceful solution to the Ukraine issue has not been completely shut, and should not be shut,” the country’s ambassador to the UN said.

Further comments

“It is currently necessary to avoid intensifying the conflict.”

“China will continue to promote talks in its own way.”

Market reaction

The S&P 500 futures still lose 2.17% on the day. AUD/USD erodes 0.77% to trade around 0.7175, as of writing. Gold is testing offers at $1,950, higher by 1.50% so far.

• EUR/USD prints the biggest daily fall in a month as market sentiment sours on geopolitical concerns.
• Russia formally invades Ukraine, tries to seize Kyiv airport, attacks capital.
• Hawkish comments from Fed’s Daly battles upbeat ECB speakers.
• Second reading of US Q4 GDP will decorate calendar but risk catalysts will keep the driver’s seat.

EUR/USD bears attack 1.1200, down 0.75% intraday near 1.1210 as Russian forces play their role to shake global markets, as already feared by the West. The geopolitical tussles propelled the safe-havens and oil prices during early Thursday morning in Europe.

That said, the latest update from Ukraine’s Interior Ministry confirms the media reports that Kyiv is under attack from the cruise and ballistic missiles.

Previously, North Atlantic Treaty Organization (NATO) officially confirmed Russia’s military action whereas CNN marked multiple explosions in Ukrainian cities.

In a response to Moscow’s military move, US President Joe Biden promised “further consequences” for Russia while US Senator Marco Rubio, also the Vice-Chairman of the Select Committee on Intelligence, said that Russian airborne attempts seizing control on Kyiv airport.

Amid the influx of risk-aversion, the US 10-year Treasury yields snap two-day rebound by declining around nine basis points (bps) to 1.88% whereas S&P 500 Futures drop over 2.0% by the press time. It should be observed that the US Dollar Index (DXY) rises 0.50% intraday due to its safe-haven appeal at the latest.

It should be observed that the early-day comments from San Fransisco Fed President Mary Daly also propel the US dollar amid fears of faster Fed rate hikes. The policymaker cited 'more urgency' on rate hikes in her latest speech.

On Wednesday, The European Central Bank (ECB) governing board member Robert Holzmann said in an interview with NNZ, “it is possible for ECB to hike rates before ending bond purchases.” On the same line were comments from ECB policymaker Bostjan Vasle. However, the central bank’s board member Francois Villeroy de Galhau said Wednesday, “we will assess the more indirect consequences of Ukraine crisis on inflation and growth in March.” “We will be facts-driven,” adds ECB’s Villeroy

That said, market players will keep their eyes on the risk catalysts but the second reading of the US Q4 GDP, expected 7.0% annualized versus 6.9% prior, will also be important to watch.

Technical analysis

A clear downside break of an upward sloping trend line from February 03, around 1.1290, directs EUR/USD towards November 2021 low of 1.1186.

• USD/CAD holds onto the previous day’s bounce off weekly low amid rising geopolitical fears.
• Russia begins Ukraine invasion, US President Biden promises “further consequences” for Russia.
• WTI crude oil renews an eight-year high as Kyiv is under attack.
• Geopolitics is the key but recently hawkish Fedspeak helps USD to remain firmer, US Q4 GDP eyed.

USD/CAD remains on the front foot, taking the bids to refresh daily tops near 1.2780 as Russia officially invades Ukraine amid early Thursday morning in Europe.

In doing so, the Loonie pair reverses the initial Asian session losses while cheering the firmer US Dollar Index (DXY) moves. However, the pair buyers fail to respect the eight-year high prices of Canada’s main export item, WTI crude oil, up 3.5% near $95.10.

That said, the DXY rallies the most in a month as Ukraine Interior Minister conveys attacks from the cruise and ballistic missiles. Earlier in the day, the North Atlantic Treaty Organization (NATO) confirmed Russia’s military action while CNN marked multiple explosions in Ukrainian cities.

Following that, US President Joe Biden promised “further consequences” for Russia while US Senator Marco Rubio, also the Vice-Chairman of the Select Committee on Intelligence, said that Russian airborne attempts seizing control on Kyiv airport.

It’s worth mentioning that the hawkish comments from San Fransisco Fed President Mary Daly also propel the US dollar amid fears of faster Fed rate hikes. The policymaker cited 'more urgency' on rate hikes in her latest speech.

Looking forward, geopolitical headlines are the key for clear market directions. Also important will be the second reading of the US Q4 GDP, expected 7.0% annualized versus 6.9% prior.

Technical analysis

A clear bounce off the five-week-old rising support line, near 1.2730 at the latest, directs USD/CAD bulls towards a resistance line from January 06, near 1.2785 by the press time.

• GBP/USD has fallen like a house of cards on soaring Russia-Ukraine tensions.
• The official announcement of Russia's invasion of Ukraine by NATO has pushed DXY higher.
• Investors are dumping risk-perceived assets on heightening the war-like situation in Eastern Ukraine. 

The GBP/USD pair has attracted some significant offers near 1.3532, which has sent the cable towards 1.3500.

The selling pressure has ramped up after NATO officially announced that Russia is invading Ukraine. The negative developments over an imminent war situation have spooked the market participants. The cable has started falling like a house of cards amid the heightning risk aversion theme.

The expectations of an imminent war turn into reality after the Russian Federation Council give a free hand to Russian President Vladimir Putin to deploy military forces in the eastern region of Ukraine.

Meanwhile, the United Nations (UN) Secretary-General said: Russian “President Putin, stop your troops from attacking Ukraine” in the going emergency Security Council meeting.

Explosions begin sounding in the distance in Kyiv, as per CNN news, which is compelling investors to dump risk-perceived assets such as the pound.

The continuation of negative headlines over the Russia-Ukraine war has created havoc for the market. This has improved the safe-haven appeal, which is clearly visible in the demand of the DXY.

The DXY looks set to claim 97.00, currently trading at 96.57 (at the time of writing), and 0.4% above Wednesday’s closing price. While the US Treasury yields are facing sheer heat. The benchmark 10-year US Treasury yields has plunged almost 3.85% on Thursday around 1.90%.

Ukraine’s Interior Ministry confirms the media reports that Kiev is under attack from the cruise and ballistic missiles.

“Attacks are occurring in Kyiv, Odessa, Mariupol and other locations in Ukraine,” the Ministry noted.

Ukraine’s Foreign Minister Dmytro Kuleba tweeted: “Putin has just launched a full-scale invasion of Ukraine. Peaceful Ukrainian cities are under strikes. This is a war of aggression. Ukraine will defend itself and will win. The world can and must stop Putin. The time to act is now.”

Ukraine's UN Ambassador noted: “The Russian UN Envoy just confirmed his president declared a war on my country.”

Meanwhile, the S&P 500 futures are down 2% on the day, as risk-aversion remains at full steam. Gold is testing $1,930 levels. 

Related reads

• Multiple explosions in multiple Ukrainian cities – CNN
• NATO has officially told Reuters that an official invasion of Ukraine has begun

In response to Russia’s aggression, Japanese Prime Minister Fumio Kishida said Thursday, “will work with G7 members, the international community on Ukraine issues.”

PM Kishida said, “still in process of gathering information after Putin address.”

• USD/JPY takes offers below 115.00 as Russian invasion of Ukraine begins

• WTI prints the biggest daily gains while piercing seven-month-old resistance line.
• Overbought RSI, September 2014 peak may test the bulls.
• 21-DMA, ascending trend line from December 2021 limits immediate downside.

WTI crude oil prices rise 2.67% on a day, despite recently easing from a multi-day high of $95.12, as Russia invades Ukraine during Thursday’s Asian session. That said, the black gold trades around $94.50 by the press time.

Read: Breaking: NATO has officially told Reuters that an official invasion of Ukraine has begun

It’s worth noting that the commodity prices recently ticked beyond an upward sloping trend line from July 2021, around $94.40 at the latest, to renew the highest levels since September 2014. However, overbought RSI conditions may test the bulls, which in turn require a daily closing beyond $94.40 to reject the odds of a pullback.

Even if the WTI crude oil prices stay beyond $94.40, September 2014 high near $96.00 will act as an additional upside filter before directing the quote towards the $100.00 psychological magnet.

Meanwhile, a pullback move will need to conquer the $90.00 threshold, also near to the 21-DMA and a three-month-long rising trend line.

Following that, the monthly low of $87.30 and the October 2021 peak of around $85.00 will be in focus.

Overall, geopolitics favor the bulls but technical details need validation to confirm the commodity’s further upside.

WTI: Daily chart

Trend: Pullback expected

British ambassador to Ukraine says a wholly unprovoked attack on a peaceful country Ukraine is unfolding.

• Breaking: NATO has officially told Reuters that an official invasion of Ukraine has begun

The comments follow Reuters reporting that Russian President Vladimir Putin authorised a military operation in eastern Ukraine on Thursday in what could be the start of the war in Europe over Russia's demands for an end to NATO's eastward expansion.

Meanwhile, US president Joe Biden has said Putin is responsible for the human suffering as a consequence to come and he will speak to the American population tomorrow. US President Biden promises "further consequences" for Russia.

This comes as Reuters witnesses are reporting explosions head in Kyiv and in the Belgorod Province of Russia. 

The events of today have sent GBP/USD to fresh lows of 1.3511 so far:

• USD/JPY prints the heaviest daily fall of the week as risk-aversion amplifies.
• NATO officially confirmed Ukraine’s invasion by Russia, multiple explosions heard by CNN.
• US Treasury yields drop the most in two weeks, stock futures, Asia-Pacific equities are down too.
• Geopolitics is the key, US Q4 GDP will be important as well.

USD/JPY takes offers around 114.70 while printing the biggest daily fall in a week, down 0.25% intraday during Thursday’s Asian session.

The risk barometer pair portrays the market’s pessimism as Russia recently started the much-feared military action targeting Ukraine. The geopolitical play has recently been confirmed by the North Atlantic Treaty Organization (NATO) while CNN marked multiple explosions in Ukrainian cities.

Following that, US President Joe Biden promised “further consequences” for Russia while US Senator Marco Rubio, also the Vice-Chairman of the Select Committee on Intelligence, said that Russian airborne attempts seizing control on Kyiv airport.

Amid the influx of risk-aversion, the US 10-year Treasury yields snap two-day rebound by declining around nine basis points (bps) to 1.88% whereas S&P 500 Futures drop over 1.8% by the press time. It should be observed that the US Dollar Index (DXY) rises 0.38% intraday due to its safe-haven appeal at the latest.

Moving on, further geopolitical plays will be critical to watch for the USD/JPY sellers. However, any surprises will have to rely on the second reading of the US Q4 GDP, expected 7.0% annualized versus 6.9% prior, for further clarification.

Technical analysis

A clear downside break of 50-day EMA level surrounding 114.75 directs USD/JPY towards the weekly bottom of 114.50. Alternatively, the 21-day EMA level of 115.05 restricts immediate upside.

• AUD/USD has slipped below 0.7200 amid escalation in geopolitical tensions.
• The risk-off impulse has underpinned the greenback against the antipodean.
• NATO has officially announced that an official war has just begun.

The AUD/USD pair has slipped below 0.7200 amid escalation in the Russia-Ukraine imminent war, which has set a negative tone for the market. This has hammered the antipodeans and has improved the appeal for safe-haven assets.

The market sentiments have been dented hard on Thursday after the Separatist leaders in eastern Ukraine have called for support from the Russian leader Vladimir Putin, which is clearly indicating the deployment of Russian troops in the regions of Donetsk and Luhansk. Adding to that, the Russian Federation Council has approved Putin to deploy "peacekeepers" in the regions of Donbas.

Meanwhile, NATO has officially announced that an official invasion of Ukraine has begun, as per Reuters. Not only this will pressure the risk-perceived assets but also the central banks would be forced to come forward with tightening monetary policy to contain the expected jump in inflation.

Also, Reuters has reported that the Emergency meeting of the United Nations (UN) Security Council has begun at the request of Ukraine. However, the odds of de-escalation in the Russia-Ukraine war seem poor.

The US dollar index (DXY) has been underpinned by investors and the index is not very far from claiming 97.00. The risk-off impulse has brought a juggernaut rally in the greenback, which is why the Aussie has failed to find the grounds.

Other than the headlines from the Russia-Ukraine war, investors will keep eye on Thursday's US GDP and Initial Jobless Claims.

The White House is out with a statement by President Biden on Russia's unprovoked and unjustified attack on Ukraine.

Key takeaways

“The prayers of the entire world are with the people of Ukraine tonight as they suffer an unprovoked and unjustified attack by Russian military forces.”

“President Putin has chosen a premeditated war that will bring a catastrophic loss of life and human suffering. Russia alone is responsible for the death and destruction this attack will bring, and the United States and its Allies and partners will respond in a united and decisive way. The world will hold Russia accountable.”

“I will be monitoring the situation from the White House this evening and will continue to get regular updates from my national security team. Tomorrow, I will meet with my G7 counterparts in the morning and then speak to the American people to announce the further consequences the United States and our Allies and partners will impose on Russia for this needless act of aggression against Ukraine and global peace and security.”

“We will also coordinate with our NATO Allies to ensure a strong, united response that deters any aggression against the Alliance. Tonight, Jill and I are praying for the brave and proud people of Ukraine.”

Market reaction

The US dollar index is trading close to 96.50 on the Russian invasion of Ukraine, underpinned by the safe-haven flows, as the world awaits the Western response and the G7 meeting.

CNN News is now reporting that explosions begin sounding in the distance in KIev.

A Reuters witness said, “series of explosions heard in Belgorod province of Russia.”

Meanwhile, US Senator Marco Rubio, Vice Chairman of the Select Committee on Intelligence, said: “Russian airborne attempting to take Kiev airport.”

Rubio tweeted: “Russia’s airborne forces are attempting to take control of the airport in #Kyiv to they can fly in forces to occupy the capital city An amphibious assault on the key port city of Mariupol is now underway Ground forces now moving in from Belarus, Crimea & from Russia.”

Related reads

• US Pres. Biden promises “further consequences” for Russia
• NATO has officially told Reuters that an official invasion of Ukraine has begun

NATO has officially told Reuters that an official invasion of Ukraine has begun. So far, however, risk currencies in forex are holding their own battle lines, with AUD/JPY at daily trendline support:

AUD/JPY daily / H1 charts

More to come...

• NATO has officially told Reuters that an official invasion has begun. 
• EUR/USD is printing fresh lows neat 1.1265.

EUR/USD is on the offer as markets are sold off due to the crisis over Ukraine. At the time of writing, EUR/USD is down some 0.3% near the lows of the day at 1.1265 after falling from a high of 1.1308. 

In an article published during Tuesday's Asian session, If Russia does invade Ukraine, this could finally spark-off the crash 'puts' have been telegraphing, it was explained that there was an imminent threat to risk assets pertaining to the prospects of war. The sessions leading into the New York morning were, nevertheless, risk-on, as FX markets continued to price more benign outcomes.

In fact, President Putin’s recognition of new autonomous zones and the crossing of the Russian military into the Donbas region was greeted with a decline in FX options market traded volatility. However, that has all turned on its head following the latest developments over the course o the past thirteen hours of trading in financial markets.

Indeed, EUR/USD bull flag could be deceptive vs. fundamentals, that article the last paragraph summed up the situation at hand well enough. 

The euro has deteriorated further reports that in the morning of New York trade, initially cited convoys of military equipment moving towards Donetsk in eastern Ukraine from the direction of the Russian Frontier. Consequently, Ukraine had planned to declare a state of emergency which was confirmed in the Asian morning and sentiment has gone downhill event since.

They were rumours of the military conflict spreading around the Twitter news feeds following the Breaking: US Blinken: Believes Russia WILL Invade Ukraine before the night is over. These rumours have now been confirmed by NATO.

In a national address on Thursday, Russia’s President Vladimir Putin authorized a special military operation in Donbas.

Key quotes

Meanwhile, there are reports doing the rounds of explosions in Kiew and other Ukrainian cities. 

Market reaction

The risk sentiment is getting battered on the above headlines, driving gold price beyond $1,920 and the US dollar index closer to the 96.50 barrier.

Risk-sensitive assets such as AUD/USD and S&P 500 futures are losing further ground, as tensions escalate over the Russia-Ukraine conflict.

Read: 

• US Senator Rubio: The Russian invasion of Ukraine is now underway

• UN Security Council begins the Emergency Meeting as Ukraine requests

Gold (XAU/USD) justifies the traditional safe-haven status by crossing June 2021 peak, taking the bids around $1,920 during Thursday’s Asian session. In doing so, the yellow metal rises for the second consecutive day by meeting the highest levels last seen during January of the last year.

The bullion’s latest moves could be linked to the Russian invasion of Ukraine, as tweeted out by US Senator Marco Rubio who is also the Vice-Chairman of the Select Committee on Intelligence.

Meanwhile, the Emergency meeting of the United Nations (UN) Security Council has begun on the request of Ukraine.

The traditional safe-haven gold will continue to benefit from heightened tensions between the West and Russia over Ukraine, with a war-like situation spelling out. 

Technical analysis

Gold reverses the pullback from a 17-month-old descending resistance line inside a fortnight-long ascending trend channel.

Gold: Daily chart

The metal’s latest bounce from lower line of the stated channel joins firmer RSI, not overbought, to keep buyers hopeful of crossing the downward sloping trend line resistance line from September 2020, around $1,910.

The June 2021 peak surrounding $1,917 is taken out, as bulls clinch fresh yearly highs above $1,920. The next powerful resistance is seen at $1,934.

Reuters is now reporting that the Emergency meeting of the United Nations (UN) Security Council begins on the request of Ukraine.

UN Secretary-General said: Russian “President Putin, stop your troops from attacking Ukraine.”

more to come ...

• AUD/JPY bears are in the runnings for a major breakout. 
• Bears need to break the daily support line in the coming sessions.

AUD/JPY bears have been penetrating fresh ground below 83 the figure, clearing the way for more downside for the days ahead.  the pair is the forex spaces risk barometer and as the Ukraine crisis intensifies, financial markets are being pressured to exit risk and seek out safe havens, such as the yen. 

This renewed conflict and risks in markets over the territory of Ukraine kicked off in November of last year when the first satellite imagery showed a new build-up of Russian troops on the border with Ukraine.

It has propelled over the months to the point where a Russian attack on Ukraine soil is expected to already be underway according to Ukraine and the US. AUD/JPY has been created in kind, but given the complexity of the situation, any pullbacks would be expected to be faded. This is not a crisis that will be cleared up at one G& or UN summit before the week is out.

It is a dispute that has lasted since 2013 when President Viktor Yanukovych rejected a deal for greater integration with the European Union that was backed by Russia but very soon run out of the country by protestors. Since then, a series of events in Russia's attempt to take back the eastern territories brought the relationship between Russia and the West to its lowest point since the Cold War.

This is a crisis that is here to stay, potentially (likely) to worsen into outright conflict before any middle ground might be found diplomatically. Hence, there is little chance of a recovery in AUD/JPY beyond recently printed highs made in recent sessions for the foreseeable future. If anything the path of least resistance is to the downside still, despite the pair having already lows 1.29% in the past twelve hours of trade between the New York open and Asian markets. 

Moreover, in an analysis of recent and similar price action, on February 10 and 11, when UK and US officials spoke of a worrisome breakdown in diplomacy and even prospects of an imminent Russian invasion of Ukraine, the pair tanked as follows:

As illustrated, the pair fell nearly 3% over the course of two full trading days, or by 244 pips. We may not have seen half of it, literally. However, from a lower time frame perspective, traders will need to account for volatility both ways, with the bears averaging and fading the rallies at critical structures along the way. 

For example, on the daily chart, the price is backing up from the dynamic support line, as illustrated above. But on the hourly chart, the price is currently testing bearish commitments back near 83 the figure in a 61.8% Fibonacci retracement: 

There could be s test higher into the 83 area as well, with 83.30 eyed as a critical level but the daily trendline support is in focus for the sessions ahead.

We saw similar corrective price action over the 10 and 11 of Feb:

Will history repeat itsself? 

• DXY stays above 50-DMA for almost a week, prints two-day uptrend at the latest.
• Firmer MACD, RSI also direct bulls towards mid-February high.
• Rising wedge offers food for thought but four-month-old support line acts as a tough nut to crack for bears.

US Dollar Index (DXY) stays mildly bid around an eight-day high despite recently easing to 96.30 during Thursday’s Asian session.

In doing so, the greenback gauge rises for the second consecutive day, also portraying the fifth daily move beyond the 50-DMA.

Also favoring the DXY buyers are the bullish MACD signals and firmer RSI, not overbought.

That said, the mid-February high near 96.43 will act as an immediate hurdle for the quote ahead of the 23.6% Fibonacci retracement (Fibo.) of October-January upside, near 96.47.

Following that, the resistance line of a three-week-old rising wedge, near 96.62, can test the US Dollar Index upside ahead of the tops marked in late 2021 around 96.90-97.00.

On the flip side, pullback moves may initially aim for the 50-DMA level surrounding 96.00 and support line of the stated wedge, near 95.90.

Even if the rising wedge confirmation pleases DXY bears, the 100-DMA and an upward sloping support line from October 2021, respectively around 95.50 and 95.40, will challenge the downside.

DXY: Daily chart

Trend: Further upside expected

US Senator Marco Rubio, Vice Chairman of the Select Committee on Intelligence, tweeted out: “The Russian invasion of Ukraine is now underway.”

“In the hours to come, Russia will

-conduct strikes on air defense systems

-move to cut off Kyiv from eastern Ukraine

-move to cut off Ukraine’s military forces on the line of contact in the east to prevent them

from falling back to defend Kyiv,” Rubio added.

Market reaction

Markets are seeing a fresh wave of risk-off flows on these headlines, with S&P 500 futures now falling 0.67% vs. the drop of 0.44% before the tweet.

AUD/USD is about to breach 0.7200 while Gold is closing in on the June 2021 highs of $1,917.